The Italian's time at Real Madrid had looked to be up amid speculation a deal had been agreed for Ancelotti to take charge of Brazil in time for June fixtures against Ecuador and Paraguay in World Cup qualifying. However, talks between the Selecao and Real Madrid now appear to be at the point of collapse.

According to Marca, Ancelotti travelled to London to sign his contract with the Selecao but has now informed the CBF he will not be taking the job.

There appear to be two reasons for Ancelotti's sudden change of heart. The first is an issue of timing. Brazil had wanted Ancelotti in place for June fixtures, but the Italian had made it clear he could not arrive until August.

Finances are also said to be playing a part. Ancelotti has received an "irresistible" offer from Saudi Arabia which may be difficult to turn down. The offer is said to be worth a staggering €50 million (£58m/$67m) net per season.

Meanwhile, Ancelotti still has a year left on his contract in the Spanish capital, and had asked Madrid for €4m (£3.3m/$4.5m) in compensation, but the club are said to be hoping he will depart and forgo any compensation owed.

Real Madrid's only hope of silverware this season is in La Liga where they sit four points behind rivals Barcelona with five games left to play. Los Blancos take on Celta Vigo next but it remains to be seen how much longer Ancelotti will be in the hotseat at the Santiago Bernabeu.