The Reds have confirmed the 42-year-old will leave Anfield at the end of the season, having been credited with overhauling the club's now cutting-edge recruitment department alongside the management of Jurgen Klopp, in a series of moves that have greatly impressed Florentino Perez.
Madrid have noted how they have been pursuing a series of Liverpool players – most prominently, Mohamed Salah – but a change in the club's direction has seen them look to Edwards himself.
With Spanish sides particularly affected by the Covid crisis, to the point where Madrid were the leading club pushing the Super League, even Perez has realised the need to further alter the Bernabeu transfer policy.
The plan for the future will be big signings, albeit signed less frequently, alongside up-and-coming stars in the mould of how Liverpool signed Salah and Sadio Mane.
Edwards is naturally seen as perfect for this, and Madrid feel they can make a persuasive case.
He has been guarded on his future in private but while he immediately rejected the idea of going to Newcastle United, The Independent has been told that has not been the case with the Bernabeu.
Madrid feel that the opportunity to work in the Spanish capital while revolutionising one of football's greatest names can be appealing.
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