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Published 22:04 3 Jun 2016 BST
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The release clause only applies to clubs in the Champions League, and so Arsenal are in prime position to land the striker, having finished 2nd (behind Leicester) compared to Liverpool's 8th place.
The Gunners are reportedly prepared to offer Vardy a four-year deal, worth £120,000 per week, a huge double-your-money upgrade on Vardy's current deal at Leicester, which is worth £60,000 a week.
Arsenal manager Arsene Wenger was understood to be in attendance at Wembley on Thursday night to watch Vardy in action for England against Portugal.
Vardy only signed his current deal with Leicester last season, and the club have made it clear they do not want to sell any of their star performers.Quiz: Name every third place play-off winner in World Cup history
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