Real Madrid are unhappy with the timing and financial arrangements of Carlo Ancelotti’s exit from the club, leaving his reported move to take over as coach of the Brazil national team in jeopardy, sources told ESPN Brasil.

On Monday, ESPN reported that there was optimism from the Brazilian federation (CBF) that a deal to hire Ancelotti as their new head coach was progressing in time for him to oversee a pair of World Cup qualifiers in June.

However, Madrid are unwilling to pay the remainder of Ancelotti’s contract which expires in 2026, leaving a move that seemed to be nearing completion at the start of the week at an impasse.

The Madrid board understands that they can accept his departure at the end of the LaLiga season but are not prepared to pay the remainder of his deal.

CBF representatives are in Madrid trying to negotiate a resolution while avoiding putting undue pressure on Ancelotti to honour a verbal agreement that was made, sources added.

Though Ancelotti is one of the most successful coaches in Madrid’s history — winning three Champions Leagues and two LaLiga titles during two spells at the Bernabéu — this season has been a disappointment for the Spanish giants.

Madrid lost to Arsenal in the Champions League quarterfinals and to Barcelona in the Copa del Rey final on Saturday. They are four points behind the Catalan club in LaLiga with five games left to play.

Brazil have been without a coach since March, when they fired Dorival Júnior after a humiliating 4-1 loss to rivals Argentina in a World Cup qualifier.

The five-time World Cup champions, who are fourth in the qualifying table, are set to play Ecuador on June 4 and Paraguay on June 9.

If Ancelotti moves on from Madrid in time for those Brazil games, the Spanish club will need to find a new coach or appoint an interim to oversee Madrid’s participation in this summer’s Club World Cup.

If Brazil are unable to finalise a deal with Ancelotti, sources said the CBF would consider resuming talks with Al Hilal coach Jorge Jesus to have someone in place for the next squad announcement on May 26.