Bayern Munich president Uli Hoeness has revealed that the club have reached an agreement in principle for the transfer of Schalke goalkeeper Manuel Neuer.

The 25-year-old has been constantly linked with a move to the Allianz Arena this term, but has also been the reported target of Manchester United.

Bayern, however, appear to have won the race for the German international, and have conceded a deal is in place.

Real Madrid have signed German World Cup star Mesut Ozil from Bundesliga side Werder Bremen for an undisclosed fee, reported to be around €15 million.

Werder turned down an offer which was described as “risible” by general manager Klaus Allofs last week but have now reached an agreement for Ozil, who would have been available on a free transfer when his contract expired in 12 months.

Real Madrid announced on Friday that they had reached a deal with Stuttgart to sign their German international midfielder Sami Khedira, who shone during the World Cup, on a five-year contract.

The club released no financial details concerning the deal.

Khedira was under contract with Stuttgart until 2011. The defensive midfielder played seven matches during the World Cup in South Africa and scored the winning goal in the third-place play-off against Uruguay.

He made his first-team debut for Stuttgart in October 2006, winning the German league title in his first season, and scored a total of 14 goals in his 98 appearances for the club.

Werder Bremen are ready to listen to offers for their German international playmaker, Mesut Ozil, the club’s sporting director Klaus Allofs admitted on Sunday.

The German first division side had been hoping to extend the 21-year-old’s contract but with negotiations having hit a wall, they are now bracing themselves for his exit.

Michael Ballack has returned to Bayer Leverkusen on a two-year contract. The 33-year-old, who is missing the World Cup through an injury picked up in the FA Cup final victory, was released by Chelsea at the end of last season.

The midfielder is returning to the Bundesliga and his old club, with whom he reached the Champions League final in 2002.

As soon as the news broke on Wednesday that Ballack, 33, would not get a new contract at Premier League champions Chelsea, the rumour mill went into overdrive.

A return to Jose Mourinho, who brought him to Chelsea, this time at Real Madrid? Back to Felix Magath, now at Schalke, under whom Ballack played at Bayern Munich until 2006? Wolfsburg, who are backed by VW and have an English coach in Steve McLaren?

Chelsea have decided not to renew Michael Ballack’s contract, and so the German international has been released by the club.

While Chelsea have been locked in negotiations with Ballack throughout the season aimed at tying up a new deal, the Blues have now withdrawn their offer because of excessive wage demands.

Germany captain Ballack arrived on a free transfer from Bayern Munich in 2006 and will now be available for nothing again after he was refused a two-year deal by the Stamford Bridge hierarchy. A one-year contract with reduced terms was was turned down by the 33-year-old.

Wolfsburg managing director Dieter Hoeness is remaining calm in response to reports that striker Edin Dzeko is close to concluding a British record transfer to Manchester City.

It was reported on Thursday that Dzeko’s representatives had held talks with City, while Tottenham and Bayern Munich are also believed to be interested in the Bosnian striker who has a buy-out clause to the value of 40 million euros (£34 million) inserted in his contract.

The clause will expire on Monday though, and it is believed City are working hard to bring Dzeko to the club as they embark on another summer of ambitious spending, with German sources confident the deal will be done.