A summer move failed to materialise as the club were unable to offload Edin Dzeko despite interest from AC Milan and Bayern Munich, while Carlos Tevez's return to form saw him return to favour under Roberto Mancini.
Chelsea are also huge admirers of Falcao, who has scored 42 goals in 53 appearances for Atletico Madrid including a stunning hat-trick against the Blues in his side's Uefa Supercup victory in Monaco last Friday.
Radamel Falcao's departure is a time-bomb for Atletico Madrid. At this point, it seems a question of when he will leave, rather than if. He is too good for a team that will never be able to fight for a title in Spain and that hasn't been able to qualify for a Champions League in the last years. That doesn't mean that Atletico won't try to cash in his eventual departure. They paid €40 million to get him (although there are rumours that Jorge Mendes paid half of the fee) and due to the club's difficult economic situation, I don't see them buckling for less than his release clause, which is suspiciously low. To give a comparison, Cristiano Ronaldo's is €1 billion. Manchester City wouldn't be deterred by a relative bargain at €60 million.
But City are confident of landing their man after a 12-month long pursuit with Atletico's recent financial struggles ensuring they must listen to big-money offers for their star player.
Falcao has a €60m release clause in his Atletico Madrid contract and City believe their strong relationship with the Spanish club will help to facilitate a deal.
City eased Atletico's financial difficulties last year by paying €45m to sign Sergio Aguero, from under the noses of their great rivals Real Madrid, with most of the transfer fee paid up front.
And Roberto Mancini will be given the funds to land a marquee signing in January despite the club's conscious efforts to balance the books and comply with Uefa’s financial fair play rules.
In an interview with Goal.com last week Falcao insisted the Premier League wasn't a "dream" of his but the 26-year-old's father has suggested that the Colombian is very likely to complete a switch to the Premier League in January - and City sources say the club will pull out all the stops to land their man.
When asked whether a move to England could be on the cards for his son in the next transfer window, Falcao senior said: "Yes, that chance is very big."
City bolstered their squad over the summer by signing Javi Garcia, Jack Rodwell, Matija Nastasic, Scott Sinclair and Maicon..
But their missed out on a number of Mancini's top targets including Daniele De Rossi, Robin van Persie, Eden Hazard and Javi Martinez.
Falcao, who joined Atletico Madrid from Porto in August 2011 in a deal worth €47m, has a reputation as one of the most clinical finishers in world football and would represent a marquee arrival to the Etihad Stadium.
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