Chelsea have been in talks to sign the Argentine throughout this month but Benfica have so far refused to do business unless the Blues pay the €120m (£105.4m) release clause.

Chelsea have offered players on loan and on permanent deals but the Portuguese side have so far refused to accept anything except the release clause.

• Transfer Centre LIVE! | January done deals | Premier League ins and outs
• Get Sky Sports | Download the Sky Sports App
• Chelsea transfer rumours

If Chelsea do meet Benfica's valuation, the transfer for Fernandez would surpass the £100m Man City paid for Jack Grealish from Aston Villa 18 months ago, making him the most expensive Premier League signing ever.

The 22-year-old wants to move to Chelsea but he has been training and playing since he was dropped for one game for going on an unauthorised trip home to Argentina for a New Year's Eve party.

Fernandez, who won the Best Young Player award at the 2022 World Cup with winners Argentina, played in Saturday's 3-0 league win at Santa Clara.

The west London side have also tried to sign other midfielders this month, including Brighton's Moises Caicedo and Everton's Amadou Onana.

Chelsea's search for a midfielder comes amid question marks over the long-term futures of Jorginho and N'Golo Kante - whose contracts expire at the end of the season.

Benfica boss Roger Schmidt criticised Chelsea's behaviour in their bid to sign Fernandez earlier this month, saying: "There is a club that wants him, they tried to attract him, but they know that they can only have him if they pay the clause.

"It's disrespectful to all of us, to Benfica. They're driving the player crazy. They pretend they want to pay the clause and then they want to negotiate."

The 22-year-old is in line for a big pay rise if he moves, but Benfica have been trying to get him to sign a new contract as they anticipate clubs such as Real Madrid and Barcelona will try to sign him in the summer.

Although Chelsea can afford to pay Fernandez's £105.4m release clause, doing so would impact their ability to comply with Premier League and UEFA financial fair play rules.

Fernandez could become Chelsea's eighth January signing

The latest Fernandez developments come after Chelsea confirmed the signing of Lyon right-back Malo Gusto for £26.3m on Sunday morning.

The 19-year-old will spend the rest of the season back in France on loan after signing a seven-and-a-half-year deal at Stamford Bridge.

His signing takes Chelsea's January spending past the £200m mark, while the Frenchman became their seventh new recruit this month.

It means Chelsea have now spent around £485m since Todd Boehly became the new owner of the club, having spent £270m in the summer transfer window.

Here are the deals the Blues have made:

• Benoit Badiashile - Monaco, £35m
• David Datro Fofana - Molde, undisclosed (reported £10m deal)
• Andrey Santos - Vasco da Gama, undisclosed (reported £18m deal)
• Joao Felix - Atletico Madrid, £9.7m loan
• Mykhailo Mudryk - Shakhtar Donetsk, £88.5m
• Noni Madueke - PSV Eindhoven, £29m
• Malo Gusto - Lyon, £26.3m

Follow the January transfer window with Sky Sports

Who will be on the move this winter? The January transfer window closes at 11pm on Tuesday January 31, 2023.

Keep up to date with all the latest transfer news and rumours in our dedicated Transfer Centre blog on Sky Sports' digital platforms. You can also catch up with the ins, outs and analysis on Sky Sports News.