Fernandez was handed an internal suspension last season after comments suggested he wanted to live in Madrid, amid speculation that he was wanted at the Santiago Bernabeu.
Those Real Madrid links have since cooled, but Man City’s interest has emerged as a genuine concern for Chelsea, with sources convinced the Argentina international remains keen on leaving Stamford Bridge.
The prospect of reuniting with former Chelsea boss Enzo Maresca at the Etihad is an attractive route for Fernandez, with background work on a potential deal having continued over the past two weeks.
So far Fernandez has remained calm about his situation and has not agitated for a transfer.
City's thoughts on his £120 million valuation will be a key moment of intrigue when their offer does arrive - and there are whispers that Chelsea are hiking the price up even further.
But officials from Stamford Bridge are planning for Fernandez's exit in the meantime.
We have reported how Alex Scott, Adam Wharton and Lamine Camara are among the players identified by Chelsea as potential midfield signings this summer.
Bournemouth's Scott and Crystal Palace's Wharton have both been told they are not for sale - but the weight of any Chelsea bid could change that stance.
The Blues already broke the bank to sign £117 million Morgan Rogers this summer and sources are suggesting they would use the Fernandez transfer money to heavily reinvest.
A huge bid that hovers close to the £100 million mark would prove difficult for either Bournemouth or Palace to turn down.
At this stage it is viewed by sources that Chelsea believe Scott is a more likely option than Wharton.
They have already had one approach for the Bournemouth midfielder knocked back, but if the Fernandez situation accelerates as expected Chelsea will need a quick solution to boost their own midfield.