Real Madrid boss Carlo Ancelotti has claimed that Barcelona are not currently direct rivals for his club.
Barca crashed out of the Champions League earlier this month but their coach Xavi Hernandez has pledged that the club will return to the level of Europe's elite in a year from now.
Ancelotti's side lead the way in La Liga going into this weekend's round of games on 42 points from their opening 17 matches - a whopping 18 points clear of their Catalan rivals, who have played a game fewer.
Barca's well-documented financial problems away from the field have led to a sharp decline of results on the pitch and an exodus of star players from the club.
Lionel Messi and Antoine Griezmann were among the players to exit this summer, joining the likes of Luis Suarez, Arturo Vidal and Ivan Rakitic in departing the Camp Nou.
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Barca have managed to win just six of their opening 16 matches in La Liga and do not appear to be in a title race this year, with their expectations downgraded to being in a battle for a top four spot and qualification for the Champions League.
Xavi's side started this weekend's action in eighth place - five points behind fourth-placed Atletico Madrid, while being nine and ten points behind Real Betis and Sevilla respectively.
Ancelotti was directly asked about Barca's situation during his press conference on Saturday and the Italian gave an honest - and damning - response.
The former Everton boss said: "Now they are not a direct rival for us.
"That is because there are other teams who are closer.
"But they do have the quality to go up to challenge once more and if I were the coach of Barcelona I would be saying exactly the same as what Xavi is."
Ancelotti, who is preparing his side to face struggling Cadiz in La Liga on Sunday, is having to deal with a Covid outbreak in the Real Madrid squad.
With players such as Rodrygo Goes, Gareth Bale and Marco Asensio all testing positive, Madrid's attacking ranks have been severely depleted.
Ancelotti confirmed that Eden Hazard - who has been a peripheral figure at the club so far this campaign with four La Liga starts and no goals in all competitions - is likely to start the game.
The Italian added: "Tomorrow he will. He is going to play because he has trained well and deserves it. Not because of the casualties. He has worked very hard.
"He has not changed mentally. His problem is that he has not always been able to train at 100 percent, as he does now.
"He is prepared for what he has shown in training.
"He was not used to playing on the right wing and I preferred Rodrygo and Asensio there.
"Eden has everything in his locker to enjoy a very good second half of the season and be a useful and important for the team."
Real Madrid are unbeaten across their last 13 matches, in which they have won 12 and each of their last 10 in all competitions.