It has been claimed in some quarters that the 29-year old has agreed to pen a four-year deal with the Merseyside club, but no deal has been agreed with Bayern Munich.
Thiago has been at Bayern Munich for seven years, since making the move to the Allianz Arena for a €25m fee from Barcelona.
Reds great Nicol admits that he feels the ex-Barca midfielder’s ability is undeniable and stressed the Spaniard is a better passer of the ball than anyone else at the Merseyside club.
However, he believes his former club’s style of play will be affected if Thiago were to start every game as he feels the 29-year old would be unable to close the opposition down for the entirety of the game.
“He [Thiago] is a better passer than anyone that plays in there [the Liverpool midfield]”, Nicol said on ESPN FC.
“The problem is the way Liverpool play in the middle of the park. It’s more to do with closing the ball down, a lot of energy and ability.
“As far as ability, I agree [that he is a better passer than any Liverpool player].
“From the other two points of view, that closing down to get that ball back, that would be affected if Alcantara were to actually start for every game.”
Thiago recently started for Bayern Munich in the Champions League quarter-final where he was involved in the demolition of his previous club Barcelona, recording an 8-2 win to progress to the semi-final, where the Germans will face Lyon on Wednesday.