By the way, with regards to letting him rot with the reserves or in a corner, the club will be mindful of the following in FIFA's Regulations on the Status and Transfer of Players.
14 Terminating a contract with just cause
A contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause.
15 Terminating a contract with sporting just cause
An established professional who has, in the course of the season, appeared in fewer than ten per cent of the official matches in which his club has been involved may terminate his contract prematurely on the ground of sporting just cause. Due consideration shall be given to the player’s circumstances in the appraisal of such cases. The existence of sporting just cause shall be established on a case-by-case basis. In such a case, sporting sanctions shall not be imposed, though compensation may be payable. A professional may only terminate his contract on this basis in the 15 days following the last official match of the season of the club with which he is registered.
The bold bit works in favour of the club, because if it feels like being nasty, it can just throw the player on for token minutes in games. However, the blue stuff gives some wiggle room for a player to argue his case if we just play him in, say, 11% of games, to meet the requirements. In Sterling's case, I think he'll have a good argument to terminate with sporting just cause if we do that to him, given his performances and contributions in these two seasons.
Taking
"Article 17 - Consequences of terminating a contract without just cause" into consideration, I think we basically have the scenarios below. Cases 1 and 2 are obviously clear-cut. Case 3 is a consequence of Articles 14 and 15, while Cases 4 and 5 are results of Article 17, and involve some wrangling which could cost the club(s) and the player time and money.
1. He signs an extension, which then resets the 3-year protected period... not going to happen unless Ward is out of the picture
2. We sell him.
3. We screw him about for a year, playing him in shit games in freezing grounds, or giving him garbage minutes; he loses a year of meaningful playing time, and files to leave with just cause. If his case is upheld under Articles 14 and 15, he leaves without any sporting sanctions at the end of next season (compensation to LFC possibly payable).
End result: We get nothing out of him for a year, may not get compensation, and he leaves having wasted a year.
4. We go about as normal, playing him in games on his current pay - he incurs an opportunity cost of 70+K a week for a year, submits a termination request within 15 days of the end of the season, i.e. he terminates his contract without just cause and outside the protected period (3 years from his last contract signing, which was Dec 2012). No sporting sanctions will apply to him or the club he joins (compensation to LFC is payable).
End result: We get a year out of him, and get some compensation. He gets to play, and gets to go where he wants to.
5. He submits a termination request within 15 days of the end of
this season, i.e. he terminates the current contract without just cause and still within the protected period of his contract. Compensation is payable to us, he faces sporting sanctions (4- to 6-month ban from official club games at national and international level at the new club, starting from the new season) and the new club faces a possible ban on registering new players for 2 consecutive transfer windows unless they can prove they weren't involved in inducing the contract breach (the rules say they're presumed guilty until proven innocent - serious!). Any person who is involved in inducing this breach (agent, player, official, etc.) is liable for sanctions (no mention of what these are).
End result: We get compensation, he loses 4 to 6 months, the club picking him up may get banned for 2 windows; the agent gets sanctioned but who knows what that means.
