The European champions have decided to keep the 23-year-old striker at the club and have assured him he will be handed a fair crack at a place in their starting XI.
Real Madrid rejected an offer of €80 million for Alvaro Morata before deciding to keep the striker at the Santiago Bernabeu, Goal understands.
Morata was pursued by Chelsea and Arsenal, among others, after Madrid exercised a buy-back clause to re-sign him from Juventus for €30m.
Last Thursday, Morata’s agents met with Madrid and a €60m bid was turned down. On Monday, an improved €80m offer from an unnamed club was dismissed after another meeting.
It was expected that the European champions would immediately sell the 23-year-old on for a profit upon his return but Florentino Perez and Zinedine Zidane have pushed to persuade him he has a future in Madrid.
Zidane and Perez are both fans of Morata and played a significant role in assuring the Spain international that he will be handed a fair shot at breaking into the starting XI next season.
Morata and his representatives were also said to be encouraged by Zidane’s selection of the likes of Lucas Vasquez on the basis of their good form over big-money signings such as James Rodriguez.
He will compete directly with Karim Benzema for the centre-forward role between star wingers Gareth Bale and Cristiano Ronaldo.