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Mainz are reportedly seeking financial damages from Anwar El Ghazi and the club intends to use those funds on a new striker.
The Bundesliga side terminated El Ghazi's contract in November after he made a pro-Palestine post on his Instagram page.
El Ghazi's treatment has resulted in a huge debate about free speech in Germany.
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A few weeks after having his contract terminated, the Egypt international sued Mainz.
They've since decided to make a counterclaim against El Ghazi, although a resolution wasn't met in last week's conciliatory legal tribunal.
There will be a final hearing in June to try and resolve the situation once and for all.
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Per the Daily Mail, Mainz reserve the right to seek further damages from the 28-year-old as the defendant. They will finance a signing to replace El Ghazi with their funds.
Despite terminating his contract, Mainz argue El Ghazi signing a two-year deal and their inability to use his has created a 'sporting challenge'.
Mainz are currently 16th in the table and are looking to sign a striker to improve their chances of staying up.
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Last week, El Ghazi was involved in a war of words with polarising Talk TV host Piers Morgan.
The former Aston Villa man responded to Morgan's anger after South Africa 'relieved' Jewish captain David Teeger ahead of the Under-19 World Cup following comments he reportedly made last year.
Morgan posted: "Have they sacked him because he's Jewish? This is shameful moral cowardice by Cricket South Africa."
El Ghazi quickly responded: "Hey Piers. Good to see you calling out moral cowardice on matters relating to the Israel and Gaza conflict.
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"I must have missed your post in outrage at the time I was sacked by a German club for standing up against the killing of innocent children and refusing to accept Israel is beyond accountability.
"Or does my religion, like that of the children of Gaza, mean I, like the lives of those children, don’t matter?"
Morgan retorted: "Hey Anwar. I must have missed your post in outrage at what Hamas did on October 7?
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"You were sacked because you refused to recant your endorsement of the genocidal mantra ‘From the river to the sea, Palestine will be free’ which Hamas uses to promote the eradication of Israel".
El Ghazi's final response reads: "Hey Piers… as a ‘journalist’ I expected your research skills to be a little better.
'Firstly, the reason for my dismissal wasn’t the ‘From the river to the sea’ post (which fyi the Germans courts recently ruled isn’t illegal nor do Hamas ‘own’ the phrase it was actually first used by the Israeli Likud party in 1977).
"Secondly, you must have again missed my post making clear I was against the killing of ALL innocent civilians and against Islamophobia and anti-semitism. Unlike some, financial compensation doesn’t dictate to whom I show humanity.
"My compassion isn’t sold to the highest bidder. There is little point continuing this debate. The world can see this exchange and the obvious hypocrisy for what it is. Peace."
Topics: Bundesliga, Mainz
Daniel Marland