Conor Gallagher has been warned he will not be certain of a place in Chelsea’s first-team squad if he turns down a move to Atletico Madrid and does not sign the contract the club have now offered him twice.

Chelsea have accepted a bid from Atletico for Gallagher and are waiting for the England international to make a decision on his future, after he rejected a new three-year deal (two years plus the option of a third year) earlier this week.

Gallagher is understood to have first turned down the offer of a two-year contract, with the option of a further 12 months, after Chelsea accepted a bid for him from Aston Villa earlier this summer. And the midfielder has now rejected exactly the same offer after Chelsea accepted a lower bid of around £34 million from Atletico.

Gallagher has one year remaining on his contract at Chelsea and will therefore be able to leave on a free transfer next summer

Such an outcome would prevent the club from generating any funds from the sale of their academy graduate and is clearly a situation that Chelsea’s key decision-makers want to avoid. A transfer fee for Gallagher would represent “pure profit” for Chelsea and would therefore be a significant boost for their financial position.

It is now up to Gallagher to decide whether to join Atletico. He could choose to wait for a free transfer next summer, or to see if any other clubs come forward before the end of this window. Chelsea believe Atletico want an answer by the end of the weekend, while club executives intend to speak to Gallagher imminently.

Tottenham Hotspur are long-term admirers of Gallagher and are still interested in the midfielder, who has also previously attracted interest from West Ham United.

Chelsea have told Gallagher he is unlikely to be a long-term starter in Enzo Maresca’s possession-based system, which is why they have not offered him a longer contract.

If Gallagher chooses to remain at Chelsea, he will be in competition for a midfield place with Enzo Fernandez, Kiernan Dewsbury-Hall, Moises Caicedo and Romeo Lavia.

Gallagher was one of the first names on the team sheet under Mauricio Pochettino last season, starting 37 of their 38 matches in the Premier League.

He made four appearances for England at this summer’s European Championship in Germany.