Sport says Zidane has decided to go with Marcos Asensio ahead of the €80 million Colombian and believes it would be better for all parties if James moved on.
However, Florentino is reluctant to sell James this month - particularly for a massive loss.
Arsenal are being linked with the midfielder, while offers were made - and left on the table - by Manchester United and West Ham United a fortnight ago. United have offered €40 million for James, while the Hammers' bid is higher.
Zidane made it clear where James sits in his plans by having Asensio and Isco start ahead of him for the UEFA Super Cup win this week.