Manchester City are prepared to walk away from their bid to sign Alexis Sanchez and give local rivals Manchester United a free run at the Arsenal star.
City have been in pole position to sign Sanchez since failing with a £60million deadline day bid for the Chile international last August.
But United blindsided their neighbours this week by launching an audacious bid to snatch the 29-year-old from under their noses with a £35m bid.
City, however, consider the financial package demanded by Arsenal and Sanchez's representatives too high for a player with just six months left on his contract.
Arsenal want £35m for Sanchez, while the player's agent, Fernando Felicevich, is also said to be demanding a fee of around £5m for facilitating the deal.
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With Sanchez's wage demands around £300,000-a-week, City are simply not prepared to meet those figures and will end their interest - unless they are lowered.
Sanchez is desperate to leave Arsenal in this transfer window and City accept their hardline stance may ultimately lead to their top transfer target joining United.
But that is a risk the City hierarchy and Guardiola are prepared to take, rather than be forced to pay over the odds for a player who will cost nothing this summer.
United, however, will pay what it takes to land Sanchez and will see it as a major coup to beat their local rivals to one of the most coveted players in Europe.
