The Mirror says Mahrez's advisers insist that Leicester agreed to let the Algerian winger go if a top club came in and offered £50m.
But Leicester blocked Mahrez's move even though Premier League leaders City are understood to have offered £60m.
That has brought about the ugly stand-off between Mahrez and Leicester which has seen the 26-year-old go missing and refuse to turn up to training. He will be missing when Leicester and Manchester City clash in the Premier League this weekend.
The Professional Footballers' Association have offered to mediate between the player and club parties but Mahrez is furious with Leicester because he insists he was given promises.