Newcastle ‘pull out of Kalvin Phillips deal over £7m loan fee’ as the out-of-favour Man City midfielder is ‘denied January move to St James’ Park’

Newcastle have pulled out of a potential January move for Kalvin Phillips due to Manchester City’s demands on the deal, according to reports.

Phillips is determined to seal an exit for another Premier League prospect in January ahead of this summer’s European Championship, with his place in the England squad under scrutiny.

The former Leeds midfielder has been deprived of opportunities since joining the reigning English and European champions for £45 million two years ago and was recently spotted for a temporary move to Newcastle.

Eddie Howe is desperate for reinforcements in the January transfer window given his side’s injury problems this season. However, Newcastle can only spend so much due to Financial Fair Play rules.

A move for Phillips would have helped them land a proven midfielder without having to worry about FFP red tape, but City’s demands have made Newcastle reconsider, as reported by The Telegraph.

Newcastle manager Eddie Howe is keen to bring in reinforcements in January to boost his squad

The Magpies are refusing to accept the £7million loan fee City want them to pay to bring Phillips to St James’ Park for the rest of the season and are prepared to walk away from the deal.

Loan fees are typically charged by parent teams who believe the departing player has resale value, as was the case when Borussia Dortmund paid £3.4 million to Man United.

However, Newcastle believes that the mentioned rental fee for Man City’s peripheral player is too expensive and therefore a deal between the two teams is now no longer possible.

City are also exploring the possibility of including a commitment to buy Phillips in the summer loan deal as they look to cash in on the midfielder who has failed to fulfill his previous potential.

Phillips has not had any playing time since moving to Manchester City two years ago

Newcastle do not want to include such a term in a loan deal for the 28-year-old, whose hopes of a move to the North East are fading for the remainder of the season.

City’s eye-watering loan fee for Phillips undermines what supporters hoped would be a simple January transaction between the two rival Premier League sides.

Pep Guardiola previously claimed that there was no place for Phillips in his immediate first-team plans and that the player is expected to leave City permanently in January or more likely this summer.

Phillips has made just 31 appearances for City since joining the club and is yet to start a Premier League game this season.