Kylian Mbappe has written to Paris Saint-Germain to tell them he will not extend his contract by one year to 2025.
Mbappe's deal runs until the end of the 2023/24 season and, with PSG unwilling to let the 24-year-old leave for nothing, he could be sold this summer.
Discussions are ongoing about a new PSG contract for Mbappe.
Last month, it was confirmed to Sky Sports News the three-year deal Mbappe signed last summer was broken down as a two-year contract, with the option of a further year. The extra year is a player option - meaning it was up to Mbappe whether he wanted to trigger it or not.
As it stands, the France international is about to enter the final year of his deal. He was in a similar position last year before PSG convinced him to extend.
If, as expected, Mbappe does not trigger the extra year, he can sign a pre-contract agreement with a club outside of France in January.
'There will be PL interest, but Mbappe has his heart set on Real'
Sky Sports News' chief reporter Kaveh Solhekol:
"It looks like the annual Kylian Mbappe to Real Madrid soap opera has started again. With the letter, what has been really upsetting for the club was that it was provided to the media before the club.
"As far as PSG are concerned, if he doesn't extend his contract by another year, that would mean his deal would run out next summer, meaning he could leave for nothing next summer - PSG will not let that happen. I've been told there is no way he will be allowed to leave for nothing.
"That, of course, opens the door to him being sold this summer and my understanding is that PSG will sell him this summer if he doesn't extend his contract by another year or sign a new contract.
"There have been talks about him signing a new contract and PSG thought those talks were going very well. I was told the talks were positive.
"Plenty of Premier League clubs are richer than Real Madrid and a lot of them have been outspending all of the big European clubs for quite a while now. There are lots of clubs in the Premier League who could afford to buy him, who could afford to get into a bidding war with Real, ie. Chelsea, Manchester City and Manchester United if they have new owners. He has been linked with Liverpool in the past as well.
"But I think what he wants to do is to go to Real Madrid at some point in his career. He's made no secret of the fact he grew up a Real Madrid fan and he was very close to joining the club last summer before he signed a new contract.
"I'm sure there will be interest from Premier League clubs, but the kind of contract we are talking is phenomenal in terms of numbers and the wages they would have to pay him and his heart is set on Real Madrid.
"He was holding up a PSG shirt with 2025 written on the back of it after he signed his contract last year. We know that, in actual fact, that shirt should really have said 2024 on the back because it was up to him whether he wanted to stay another year.
"Because he has sent this letter to the media and to PSG, he is basically saying he can leave for nothing next summer; now it's up to PSG to decide what they want to do. Are they willing to let one of the best players in the world leave for nothing next summer?
"PSG are very frustrated. The last thing they wanted was to have this whole soap opera start again - and it has started early, just two days after the Champions League final. Everyone is drawing their breath and Mbappe is kicking off again.
"I want to clarify because it is a complicated point. There was no need for him to send this letter at all. The deadline was July 31 - seven weeks away. If he had not sent a letter or said anything, it was an automatic non-renewal. So what is really strange as far as PSG are concerned is why he has even written this letter. All he needed to do was wait."
View from France: Déjà Vu for PSG in summer saga
French football expert Jonathan Johnson told Sky Sports:
"The reaction in France has been one of surprise as it has blindsided PSG and there's also one of dread in the Parisian fanbase, who are not looking forward to another summer of speculation regarding Kylian Mbappe's future.
"It's obviously something that surprised the club given that Mbappe and his entourage went through L'Equipe first before the club actually found out about this letter.
"It's surprising as well given that this decision has come in their view too far in advance - it was expected that a decision on whether he would stay at the club would come at the end of July, but given he's communicated this decision six weeks in advance certainly wasn't something that PSG were expecting to hear about so soon.
"Mbappe did say at an awards ceremony only two weeks ago that he would be staying at PSG next season and I don't think that's necessarily changed.
"We do know that Real Madrid are the favourites to sign him at some point in the future having already signed Jude Bellingham.
"The chances of them being able to put the finances together to potentially land Mbappe this summer too would be complicated.
"PSG are already saying goodbye to Lionel Messi and Sergio Ramos this summer and there are also attempts on PSG's part to separate from Neymar as well so that would leave Mbappe as the undisputed top dog next season.
"So I don't think his plans to play for PSG next term have necessarily changed however there has been a long-term felling that 2024 would be his final year in Paris and that he would sign off by representing France in Paris in the Olympics in the summer of 2024.
"PSG are now in a difficult position where they haver to either convince him to extend or potentially cash in on him this summer to avoid the risk of losing him on a free next year. It would be déjà vu for PSG given they were in this same position last year."