Coates looks to be leaving the club on loan.
Coates joined the Reds in the summer of 2011 for around £7 million but has never really had the opportunity to impress during his time at the club - having been used sparingly in cup games and Europa League matches, and making the odd Premier League appearance.
The 23-year-old has made 24 appearances for the Reds, and over such a period, only making that amount of appearances for a player of his age isn't enough.
A centre-back needs games and a lot of time to develop. During a lot of his performances, there were times when Coates came across as rash, clumsy but one couldn't help but feel there was a bit of talent in there that needed developing.
Tall in stature, he has the presence to be a commanding player at the back, and if he was given the desired run of games he could eradicate some of the errors from his game.
He also needs to be at a place where the expectation isn't so high. Errors at the highest profile clubs can really knock the confidence of a player that isn't near their peak - and moving to Sunderland, who would at least try and consolidate a position in the Premier League in mid-table would certainly be a good level to learn at - alongside experienced players at the club.
It's the perfect environment for him to get some confidence - under a manager of the same nationality in Gus Poyet - especially after suffering a massive injury setback last term.
If he stayed at Liverpool, his opportunities would be increasingly limited, a loan move is the best for him to show what he can do, and start building the career to back up the talent he has.