Real Madrid had been working on a plan involving Kylian Mbappé — the France captain was reportedly asked by the club to use his relationship with Olise to convince the 24-year-old to make the move. The two have a strong connection on and off the pitch at international level, and Madrid believed that personal influence could prove decisive given Bayern's reluctance to sell.
The operation has run into two obstacles. Bayern have made clear they have no intention of parting with Olise, who scored 22 goals and registered 31 assists in 52 appearances across all competitions last season.
And Bild now reports that the player's entourage has sent positive signals to Bayern Munich indicating Olise wants to extend his contract, with formal negotiations expected to begin after the World Cup.
The picture is not entirely clear. Kicker reports that Olise remains attracted to Real Madrid and that Paris Saint-Germain are also monitoring his situation. But the balance of signals has shifted enough for Madrid to redirect their energy elsewhere.
Olise, born in London and raised partly in France, came through the Crystal Palace academy before joining Bayern last summer. He has started both of France's World Cup group games, and his combination with Mbappé has been one of the tournament's standout features. France face Norway in their final group fixture with first place already secured.
Whether Madrid revisit the situation next summer depends on what Olise ultimately decides. For now, a player they had placed near the top of their list is expected to stay in Bavaria.
Bayern's commercial and sporting case for keeping Olise is straightforward. At 24 and under contract, he is the kind of player clubs build around rather than cash in on.
A summer in which the club have already managed the Nicolas Jackson situation and other squad decisions leaves them in no hurry to create another problem in attack. If Olise signs a new deal, it will close the door on this transfer story for the foreseeable future.