Chelsea have chosen to pay a £5m penalty to Manchester United to get out of their obligation to buy Jadon Sancho permanently at the end of the season.
Sancho, 25, spent the last season on loan at the Blues, joining from United last August on an initial deal until the end of June.
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The terms of the loan meant Chelsea would have had to pay a fee of around £25m to complete the transfer outright if they finished higher than 14th in the Premier League - or pay a penalty to opt out.
It is understood that a failure between the club and the player to agree personal terms was a factor in the deal being terminated.
It means an uncertain future for the former England winger, who left Old Trafford following a prolonged falling out with former boss Erik ten Hag and had not been expected to return.
It was anticipated that the move to Stamford Bridge, which was agreed late in last summer's transfer window, would herald a fresh start and reinvigorate a career that had stalled at United, where Sancho had rarely matched the form he had displayed for his former club Borussia Dortmund.
However, following a bright start in which he assisted the winning goal for Christopher Nkunku against Bournemouth on his Chelsea debut, his contributions for Enzo Maresca's side were at best patchy.
He scored only five goals in 41 appearances across the season, though that number included memorable Premier League strikes against Tottenham and Ipswich as well as the third goal in Chelsea's 4-1 Conference League final victory over Real Betis.
Maresca always publicly backed him whilst indicating he wanted more goals from the former Manchester City academy player, though he also made similar demands of his other wingers, Noni Madueke and Pedro Neto.
In the end, Sancho was made to settle for being rotated in and out of the team with Neto and Madueke, with youth product Tyrique George also coming into the side.
He will now return to a Man United side in crisis, still reeling off a 15th-place finish and defeat in the Europa League final, and may yet leave Old Trafford permanently before the summer’s end.
Additional reporting from PA.
