The England international is one of three key players out of contract at the end of the season, along with Virgil van Dijk and Mohamed Salah.
Alexander-Arnold has been heavily linked with a move to Spanish giants Real Madrid despite recently admitting that he is 'living the dream' at Liverpool.
The reigning European champions have allegedly informed Liverpool of their desire to sign Alexander-Arnold when his contract expires next summer.
Los Blancos are keen to strengthen the right side of defence, especially as they have seen their squad depth test by Dani Carvajal's season-ending knee injury.
Liverpool fail to make progress in Alexander-Arnold contract talks
From January 1, Alexander-Arnold will be able to sign a pre-contract agreement with clubs from overseas unless Liverpool can make swift progress in contract negotiations.
However, according to The Athletic, Liverpool are 'yet to make a breakthrough' in contract negotiations with Alexander-Arnold.
The Reds view the full-back as an integral part of Arne Slot's side and are said to be 'working hard to keep him' at Anfield.
But with 2025 fast approaching, Liverpool will have to move quickly if they are to prevent Alexander-Arnold from discussing pre-contract agreements with his potential suitors.
What about Van Dijk and Salah?
Like Alexander-Arnold, Van Dijk and Salah have both seen their futures become the subject of much speculation due to their expiring deals.
However, a recent report claimed that it is only a matter of time before Van Dijk puts pen to paper on a new contract at Anfield.
Meanwhile, Salah is believed to be keen to extend his stay on Merseyside, although he has been left 'exasperated' by the lack of progress in negotiations.
The uncertainty surrounding the trio's future has not affected matters on the pitch, with Liverpool currently sitting nine points clear at the top of the Premier League table.
Alexander-Arnold, Van Dijk and Salah are all expected to be in action when Liverpool take on Newcastle United at St James' Park on Wednesday.
Written by
Ben Sully