Liverpool are unlikely to offer Thiago a new deal which would leave him free to depart in 12 months.
The midfielder joined from Bayern Munich in 2020 but hasn't regularly hit the heights expected and is now well into his 30s. Injury issues have plagued Thiago's time at Anfield, which has limited his game time, whilst others have questioned his suitability in a Jurgen Klopp side.
Liverpool are in the midst of a midfield revamp as they look to re-energise their side and Thiago doesn't appear part of their long-term plans. Goal reports that the Spaniard is likely to be allowed to run his current contract down, but is not expected to be sold this summer.
Club chiefs at Anfield are determined to avoid tying players down beyond their peak years, especially as an ageing squad has been unable to implement Klopp's intense gameplan, which has led to so much success previously, but left them exposed several times in the past 12 months as they missed out on the top four.
James Milner, Alex Oxlade-Chamerlain and Naby Keita are all departing this summer as the Reds eye new blood in the middle of the park. It leaves Klopp with a mix of young and old as the likes of Jordan Henderson, Fabinho, Harvey Elliott and Stefan Bajcetic battle for places going forward.
They opted against signing new midfielders last summer, which has since been cited as an error, leading to suggestions they will invest heavily this time round. Jude Bellingham had been seen as a target, but Liverpool have since pulled out of the race with the cost of the deal proving beyond them. They've now been linked with the likes of Mason Mount, Alexis Mac Allister and Manu Kone.
Liverpool were previously held up as Europe's standard bearers when it came to recruitment as their shrewd transfer policies led to them winning the Champions League and Premier League in successive years without breaking the bank.
In recent windows however some of their deals have not worked out, which has seen them fall off the pace domestically. Klopp though is confident that a lack of Champions League football will not hamper their business: "It is a fantastic club with a really good football team and even better, hopefully, next year.
"I've barely faced the situation where you talk with a player and everything is great and he says, 'okay see you if...' That doesn't happen really often. We are still Liverpool and we are really attractive for a lot of players, we should not forget that. That's why I'm not concerned about that fact."
