The England defender's contract at Stamford Bridge runs out next summer, but the Blues are unwilling to offer the 31-year-old more than a one-year extension to his current deal.
Apparently the stingy approach to extensions is now a blanket rule at Chelsea for any player over 30, and despite Cole's superb form last season there will be no exception made.
Cole is furious at the decision, and will see out his contract if his employers don't back down.
"Mr Abramovich has a rule that anyone over 30 can only be given a one-year extension but it's madness in Ashley's case," a club source told The Sun.
"Everyone knows he's the best left-back in the world. He trains hard, really looks after himself and can play at this level for many more years to come.
"There isn't a club in the world who wouldn't want Ashley on a free."
Cole would be allowed to sign a pre-contract agreement with another club in January if he does decide to leave.
Also on his way out of Stamford Bridge is Florent Malouda. The Frenchman is splashed across the Daily Mirror, Daily Mail and Daily Star today after apparently being made a £4m-a-year outsider, following a Tweet suggesting that he has been told to train with the U21 squad.
The Mail reports that the Frenchman would have moved to Brazil with Santos or Vasco da Gama had he been willing to compromise on his £80,000-a-week wages, but will now be forced to kick around Cobham for the final year of his contract.
If Manchester City are indeed preparing a £95m bid for Cristiano Ronaldo, as reported earlier in the week, they are wasting their time according to The Sun - at least until Alex Ferguson retires.
The paper reports that the Portuguese player would never move to City while the man he described as being "like a father to me" still rules the roost at Old Trafford.
"Cristiano has always been close to Alex Ferguson and even now they still talk," a 'source close to Ronaldo' apparently told the paper. "Cristiano simply would not risk hurting him by joining Ferguson’s immediate rivals."
Speaking of massive transfer deals, Manchester United's proposal to introduce Financial Fair Play-style regulations across the Premier League will be discussed today - but Wigan boss Dave Whelan told the Daily Mail that United only put the idea forward because of how Manchester City have spent their way to the top.
"I think City have shaken them up a little bit," says Whelan, who backs the plans regardless. "We've got financial regulations in the Championship and the Champions League so we need to do it," he added.
With the Russian transfer window closing on Thursday there is still a good chance that Andrei Arshavin will leave Arsenal. The Gunners had been holding out for £5m for their record signing, but are now apparently so keen to get him off the books that they will let him leave for nothing, the Daily Mirror claims. Zenit St Petersburg, CSKA Moscow and Dynamo Moscow are all keen on the 31-year-old.
And finally, there are more revelations in the Daily Mirror from Wayne Rooney's autobiography - and they're a lot better than Wednesday's words of wisdom about how drinking beer and doing less exercise makes you put on weight.
Rooney describes the feeling of scoring a goal in the Premier League as being like "the sensation I get when I've smashed a golf ball flush off the face and watch it trickle onto the green"; how "it doesn't get any better" than his overhead winner in the Manchester Derby last year; the agony he felt while being jeered by Sunderland fans doing the 'Poznan' in honour of Manchester City winning the title in May; and how he expects to spend the final few years of his career as a midfielder.
"When I get stuck into the action as a central playmaker, I love it," Rooney's ghostwriter writes. "I get more of the ball, I'm involved loads more... Once I feel that I haven't got the sharpness needed to get away from defenders, I'll probably drop back into midfield for a couple of seasons so I can still influence the game."