Newcastle target Kalvin Phillips has reportedly informed Manchester City of his desire to leave in January, but the transfer faces a major obstacle as the club aims to secure the midfielder.

According to reports, Phillips, 28, has long been on Newcastle's radar as they look to strengthen their midfield following the betting ban of Sandro Tonali. Eddie Howe's side is said to be the front-runners to sign Phillips next month, but they must structure the deal within their financial fair play budget to comply with club regulations.

While Manchester City would prefer to sell Phillips, it is believed they are open to loaning him out if a significant portion of his £130,000-a-week salary is covered. Other Premier League clubs may also enter the race to sign the England international, and Juventus has reportedly held talks with his representatives regarding a potential move.

Phillips, who has played a mere 89 minutes in City's first 17 Premier League matches this season, recognizes the need for regular first-team football in order to secure his place in the England squad for Euro 2024. Gareth Southgate, the manager of the Three Lions, has praised the midfielder's quality and character and hopes for a resolution that benefits all parties involved.

City boss Pep Guardiola has expressed regret over his decision regarding Phillips, stating that he feels sorry for the midfielder and acknowledging his excellent attitude and personality. However, Guardiola also mentioned the challenges he faces in visualizing Phillips within his team, but he remains open to the possibility of the midfielder staying at the club beyond January.

The potential departure of Phillips has led City to consider Fulham's Joao Palhinha as a possible replacement. The Portuguese midfielder missed out on a move to Bayern Munich during the summer transfer window and could be on the move in the upcoming month.