Chelsea could be set to lose out on a key target to a domestic rival this summer.

The Blues are hoping to make Sporting CP midfielder Manuel Ugarte their first signing in the coming weeks.

Manager Mauricio Pochettino believes Ugarte is essential to the construction of his new team.

However, A Bola in Portugal state that Manchester United have entered the race to sign the Uruguayan.

The Red Devils and PSG are the two clubs rivaling Chelsea, and both can offer Ugarte Champions League football.

Meanwhile, the Blues are not in any European competition next season after a bottom half Premier League finish.