Los Blancos are gearing up for a summer of changes, ahead of the 2023/24 campaign, with Carlo Ancelotti keen to complete his transfer business early.
Former Belgium international Eden Hazard will also leave, after the club agreed a deal to terminate the final year of his contract in the Spanish capital, on the back of a disastrous time in Madrid.
Diaz’s contract expires at the end of June and the club have previously informed him they would not be seeking a renewal.
The 29-year-old will be looking to start afresh in the coming months with the strong potential of remaining in La Liga next season.
Despite never managing to retain a regular starting place, his role as a squad player at the club ensured key titles for the striker, with three Spanish top flight crowns and two Champions Leagues.