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As the midfielder has impressed during his ongoing loan spell at the Emirates, the Gunners were looking to turn his stay into a permanent one in the summer.
The 23-year-old has become a sort of fan-favorite at the Emirates after impressing during his ongoing season-long loan at the North London club.
However, while the Gunners are reportedly keen for him to extend his stay in the Premier League, Ceballos has claimed that Zidane told him in a meeting the pair had a few months ago that his future is in Madrid
I have a good relationship with him and he always told me that we are similar players in the sense that I need to play very often in order to be in good condition. He always told me that my future is in Real Madrid and that I needed to be patient because I will likely have a chance.'
The reversal in their stance has come a few months after it was first reported that his falling out with boss Frank Lampard might signal the end of Kepa's career at Stamford Bridge.
His poor form in front of goal this season, which has seen the world's most expensive goalkeeper boasting the lowest save percentage of any goalkeeper in the league, saw him fell out of favor with his manager ahead of his side's 2-2 draw with Leicester at the start of February.
Lampard then forced the former Athletic Bilbao goalkeeper out of his starting XI for the next month, with veteran Willy Caballero replacing Kepa in the squad. That forced speculation that the Blues might look to cash-in on Kepa in the summer.
However, as Daily Mail now reports, fears that the financial consequences of the coronavirus pandemic might see the value of Kepa nosedive has convinced the Blues hierarchy to keep the hold of their number one for the foreseeable future.
Culture Secretary Oliver Dowden had earlier urged both the broadcasters to made the remaining games free for all when the season resumes.
Sky Sports and BT Sport are unlikely to agree to the demand that they broadcast for free the remaining 47 games of the Premier League season.
Both the broadcasters are domestic rights holders of the Premier League and have already paid £421m for matches that are currently suspended due to the coronavirus pandemic.
They are resisting pressure to showcase games for free that would decide the title, occupants of Champions League and relegation places, as per Daily Mail.
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