He made just four appearances for City this season - three in the Carabao Cup and one in the Community Shield - with manager Pep Guardiola preferring to use more senior options in the Premier League and Champions League.
Similarly to Jadon Sancho, who left City for Borussia Dortmund in 2017, Diaz is said to have become disillusioned with the lack of genuine first team opportunities at The Etihad and is now thought to be close to sealing a deal worth an initial £15.5 m (possibly rising to £22m).
It has been widely believed that Spanish giants Real Madrid have always been interested in his services.
The club clearly rate the youngster high enough to bother installing this clause in the player's contract, though it does seem petty that City have tried to put Madrid off of selling Diaz to their crosstown rivals. "Today (Saturday) he trained with us".
The reigning Premier League champions may not be able to keep Diaz, but they surely don't want him playing against them.
City have also included an agreement whereby they would receive 40% of any future transfer fee if Diaz were to join Manchester United.
Manchester City have agreed to sell Brahim Diaz to Real Madrid in a projected £22 million deal.
Dani Ceballos, a 16 million euro acquisition from Real Betis in 2017, has also failed to hold down a place in Santiago Solari's side while Theo Hernandez, who switched from neighbours Atletico Madrid previous year, is on loan at Real Sociedad.