Looks to me to be something "physical" (as distinguished from "electrical").
As if the layers of the display had delamination, or if dust or air seeping in was causing the discoloration.
It's out-of-warranty at this point, of course.
In my opinion, not worth paying for a new display on what is now a 7-year-old computer.
I'd reckon these are your remaining options:
1. live with it.
2. get an external display, connect it, and use that as your primary display (and squeeze more service life out of the old iMac). You can find high-quality 1080p displays (either 24" or 27") in the $200-240 range these days.
3. start shopping for a replacement (either wait for the 2018 iMacs, or if budget is a consideration, check out Apple-refurbished).