Manuel Pellegrini's impending arrival at Manchester City is reportedly being delayed due to issues over compensation.

The former Premier League champions are believed to be trying to avoid paying Pellegrini's former club Malaga £3.2m in compensation.

It is understood that Pellegrini has not received his wages from Malaga in the last two months, but his contract claims that a third month without payment would allow the Chilean to move to City without a compensation fee, according to The Mirror.

Meanwhile, City target Isco has suggested that he could snub the North-West outfit in favour of a switch to Real Madrid.