The Canada international could be one of the most high-profile and in-demand free agents on the market next year, as he is about to enter the last six months of his contract with Vincent Kompany's side.
Real Madrid and Manchester United have long been considered the two frontrunners to sign Davies in the summer transfer window, although it was recently claimed that talks with Bayern over a new deal were finally progressing.
However, there has supposedly been another twist to the tale, with Davies's agent alleged to be angry at the way that Bayern have conducted themselves in negotiations and therefore opening the floor to the highest bidder.
Real Madrid have apparently issued an ultimatum to the Canadian defender, insisting that they want a definitive answer by January, otherwise they will scour the market for alternative left-back targets.
Liverpool 'most plausible Premier League destination' for Davies
Man United are also said to be monitoring different options too, including Bournemouth's Milos Kerkez and Girona's Miguel Gutierrez, potentially opening the door for other clubs to steal a march.
According to The Athletic, the most 'plausible' Premier League destination for Davies is Liverpool, whose long-serving first-choice left-back Andy Robertson has experienced a sharp fall from grace this season.
The Scotland international was given a straight red card for a last-man foul in Saturday's 2-2 Premier League draw with Fulham, and Kostas Tsimikas has enjoyed more frequent starts under Arne Slot than initially anticipated.
However, those close to the club have apparently denied that a deal for Davies could be done in 2025, even though the English top-flight leaders have 'expressed an interest' in a 2025 deal.
The report adds that Arsenal and Chelsea have also been keeping a close eye on the situation over the past few months, but neither side is thought to have a serious interest in signing the left-back just yet.
Could Barcelona throw their hat into the ring?
Barcelona should be in safe hands for years to come regarding their left-back situation, as Alex Balde is just 21 years old, but they are said to be interested in Davies nonetheless.
However, the Catalonian giants are still operating under tough financial restrictions, and there are apparently 'serious doubts' over whether they could afford to sign him next year, even if on a free.
New signings Dani Olmo and Pau Victor have apparently not even been registered for the second half of the 2024-25 season yet, and Barcelona therefore need to work to raise funds in January rather than splashing the cash some more.
Davies has provided two assists in 20 appearances for Bayern Munich in all competitions this season, taking his total for the club to 11 goals and 33 assists in 215 appearances since joining from Vancouver Whitecaps in January 2019.
Written by
Ben Knapton