Get up to date on Arsenal transfer news, injury updates, fixtures, not restricting reports on Arsenal Ladies and share your opinions on Goonerhead
According to BILD, the Bundesliga champions have prepared a new bid of €40 million (£35m) for the Chilean, but would offer him a lucrative contract far in excess of that figure.
While Manchester City are ready to offer as much as twice that fee to land Sanchez, Bayern believe Arsenal could be tempted to accept their own, lower offer in order to ensure he is playing abroad next season.
Sanchez cost in the region of £35m when he signed from Barcelona in 2014, and Arsenal risk making zero profit on a player who was in exceptional form last season.
Bayern’s decision to sign former Arsenal forward Serge Gnabry appeared to have ended their interest in Sanchez, but their determination to sign him remains as steadfast as ever.
They have put together a salary package worth €15m (£13.2m) per season over a four-year deal that would run until 2021, equating to €60m over the duration of the deal.
That works out at around £250,000 per week before tax, but Sanchez is demanding closer to £400,000 – a sticking point in extension talks with the Gunners.
City, however, would be able to give in to Sanchez’s demands and thus make him the highest paid player in the Premier League.
That gives Arsene Wenger a huge dilemma: either accept less money for Sanchez but sell him abroad, or get a reasonable fee but strengthen a domestic rival.
The Gunners have very little wiggle room in negotiations, with Sanchez’s contract set to expire next summer, meaning he could negotiate for a free transfer come January.
Sanchez scored 24 goals in the Premier League last season, narrowly missing out on the Golden Boot, and provided an additional 10 assists, while he also struck three times in the Champions League.