Sources: James set for Zidane showdown talks
Last Monday, Madrid informed James they want him to stay at the club despite interest from Atletico Madrid and Napoli.
However, sources have told ESPN FC that the final decision remains up in the air because James wants to feel like an "important player" in order to "succeed" at Madrid.
James believes he can still "be a success" at the Santiago Bernabeu but he's waiting to speak to Zidane in the next few days to determine whether the Frenchman is prepared to give him opportunities and if that is not the case, he will consider leaving the club.
After spending the last two seasons on loan at Bayern Munich, James' departure from Madrid appeared to be sealed but the Bundesliga club decided against activating the option to sign him on a permanent deal.
Zidane didn't count on the Colombia international during his first spell at the Bernabeu and both Napoli and Atletico are prepared to capitalise on the situation and acquire his signature.
"I don't know if James is going to be at Real Madrid next season," Zidane said after the 1-0 defeat to Tottenham in Munich. "I'm not involved in that."
Atletico were in pole position to sign him because the Italians are only prepared to offer a loan deal and James prefers to stay in La Liga.
Last week, Atleti's CEO Miguel Angel Gil Marin confirmed the club's interest for James in an interview with ESPN but added that the final decision will depend on Madrid president Florentino Perez.
An agreement appeared close but everything changed after an injury to Marco Asensio and Atletico beat Madrid 7-3 in the International Champions Cup. Alarm bells started ringing at the Bernabeu and last Monday, Madrid told James that he was not for sale.
However, they are not throwing in the towel at the Wanda Metropolitano. Sources close to the club believe that Madrid's stance is a "sign of pressure" and they are hopeful an agreement can be made before the end of the transfer window.
James continues to train and hopes to hold a conversation with Zidane.
A source close to the player has told ESPN FC he plans to continue living in Madrid meaning a move to Napoli is very unlikely, although Madrid would prefer him to sign for the Serie A club instead of Atletico.