The two clubs have now moved on to other targets after fighting it out for the Blackpool man's signature, while Real Madrid have developed an understanding with Manchester City
Liverpool and Tottenham had been in pole position to capture highly-promising Blackpool winger Tom Ince.
But the Sweeper has learned that the two Premier League big hitters have now dropped their interest in the England Under-21 international.
Liverpool came close to signing Ince in January but could not agree a fee with Blackpool during what were understood to be 'heated' negotiations with the Championship club, which were complicated by the 35 per cent sell-on clause in the deal that took Ince from Anfield to the Seasiders in August 2011.
Liverpool have turned their attention to other targets as they close in on four new signings to add to early summer captures Kolo Toure and Iago Aspas.
Spurs had registered their interest in Ince, who is rated in the £8 million bracket by Blackpool, but have now set their sights on other attacking midfield targets.
The chase for the 20-year-old's signature is now being led by Swansea City and Premier League newcomers Cardiff City and Crystal Palace. Everton are also understood to be monitoring the situation.
Ince is still expected to leave Blackpool this summer but the player's father, Paul, the former England and Manchester United midfielder who is his manager at Bloomfield Road, will have the main say on his final destination.
"It all depends on the move being right for his son," a source close to the situation told the Sweeper.
The Liverpool academy graduate has blossomed at Bloomfield Road, scoring 18 league goals for the 15th-placed second tier club last season.
- Wayne Veysey
MADRID & MAN CITY IMPROVE RELATIONS
Real Madrid seem to be increasing their sphere of influence in the Premier League.
The Sweeper understands the Spanish giants are keen to develop a decent working relationship with fellow rich boys Manchester City.
Both clubs have been in pursuit of Malaga wonderkid Isco and Napoli's Edinson Cavani during the current transfer window but the two superpowers are keen not to spark a bidding war on mutual targets going forward.
Madrid president Florentino Perez is a business associate of City's owner Sheikh Mansour, and regularly spends time in Abu Dhabi.
Sources have indicated that a 'degree of understanding' now exists between the two clubs, with Madrid already having a strategic alliance with Tottenham in terms of sharing important information.
- Paul Clennam