Manchester City's £50million straight-cash offer for Alexis Sanchez has been rejected by Arsenal.
But the Gunners could still let the Chilean winger leave before Thursday's transfer deadline, with City ready to return with another tempting bid.
City will now put England international Raheem Sterling into a player-plus-£30m deal.
While Arsenal remain keen to keep Sanchez, their stance has weakened slightly from Arsene Wenger’s previous defiant message that they would not sell him this summer at any price.
Sanchez has anticipated being needed for a City medical on Wednesday by asking for permission to leave the Chile training camp — a request that has infuriated his country’s coaching staff as they play a vital World Cup qualifier against Paraguay on Thursday night.
City have an official on stand-by in South America.
Sterling might be tempted to switch if he feels he is not in City’s plans, and that he'd get the opportunity for regular football at the Emirates.
The Blues insist it was Arsenal who initiated the discussion about Sterling. But with Wenger keen to retain Sanchez, despite him being in the final year of his contract, the Gunners claim they are not chasing a deal.
While a straight cash offer of £70m would also make Arsenal think about selling Sanchez, they are concerned cashing in would leave them short with just a few hours left in the transfer window.
However the chance to take Sterling, who cost £44m when he made a controversial move from Liverpool two years ago, as an instant, top-quality replacement has its attraction.
He is six years younger than Sanchez, an England international and would join on a long contract — however player-plus-cash deals are notoriously difficult to get over the line.
Arsenal are simply not interested in Sterling's team-mate Sergio Aguero as they are well stocked with strikers.
City will not entertain the Argentina international leaving, either.
Wenger had been chasing Monaco midfielder Thomas Lemar but has had two bids turned down.
The Gunners know the French champions do not want to sell the player and so they will not part with Sanchez now unless the deal on offer is simply too good to turn down.