AS says Costa's contract in the Spanish capital is up as of June 2021 but he has instructed the Atletico hierarchy to terminate it six months early.
Atletico do not want to sell to a direct rival and with Arsenal not participating in the Champions League, a move to the Emirates Stadium could suit all parties.
Costa is said to want to remain in Europe as he is convinced he has 'two or three seasons' left at the highest level.
Arsenal are seen as offering a 'favourable situation' for Costa and Atletico as they look to work out a potential deal for him to leave his contract six months early.
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