Real Madrid were among the contenders chasing Erling Haaland’s signature over the off-season.
Los Blancos, along with Paris Saint-Germain, Chelsea, Manchester United, Barcelona and Bayern Munich, were interested in the former Borussia Dortmund striker.
Eventually, the Norwegian decided to join Manchester City and went on fire with 14 goals in 10 games in all competitions, but Madrid are keeping tabs on him.
Madrid will try to sign the 28-year-old Portuguese full-back in mid-2023, with Cancelo under contract until 2027, although the report claims he will cost around €40-50m (£35-44m).
The Spanish champions are planning to swoop for Haaland, but not until 2024, with Karim Benzema in the twilight of his career.
Haaland reportedly has an exit clause in his contract with City until 2024 worth €180m (£158m).