Liverpool decided to pursue a £45million deal for Wolves forward Diogo Jota after Watford demanded a bigger upfront fee for winger Ismaila Sarr.
The Reds had been keen on signing Sarr, who was put up for sale by the Hornets following their relegation to the Championship.
However, any suggestion that the side’s relegation would result in a reduced fee for Sarr were quickly quashed in the early stages of negotiations when Watford demanded an upfront fee of £40m for the Senegal international.
Watford signed Sarr for £40m 12 months ago but the Hornets felt his reputation had been enhanced during a season at Vicarage Road and they even demanded further add-ons in a deal that would eventually rise to £50m.
Liverpool were unwilling to accept such a structured deal and quickly ended discussions with Watford.
Instead, the Reds turned to Portuguese ace Jota and they were encouraged by the receptiveness Wolves showed towards accepting a smaller upfront fee, according to the Athletic.
Liverpool’s board are wary of the financial impact of the pandemic and the club sought smaller upfront fees as a way of combatting the hit of Covid19, as they feel their finances will recover in the long-term to vindicate their purchases this summer.
Watford still hope to cash in on Sarr, despite the lack of time left in the transfer window. Manchester United have been linked with the winger but their priority remains Dortmund ace Jadon Sancho.