Pelle celebrates scoring against Spain at Euro 2016
Real Madrid activated their £23million buy-back clause to bring Morata back to Spain from Juventus last month.
And the Spanish club are now said to be considering whether to keep him at the Bernabeu or sell him on at a profit.
Manchester United, Arsenal and Chelsea are all thought to be interested in a deal for Morata, who scored three times for Spain at Euro 2016 before they were eliminated by Italy.
Even Costa has been linked with a return to Atletico Madrid but whether he stays or not the Blues reportedly want to add another striker to their squad.
The Mail also claim Chelsea will offer Pelle, 30, a one-year contract with an option of another year.
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