The deal has also been complicated by the fact that Manchester United have, apparently, shown an interest and may be willing to offer more cash than City.
Wenger said: "It looks like Sanchez will not extend his contract".
Arsenal have faced a lot of criticism for letting the contracts of Ozil and Sanchez run down, and could face a similar situation with a handful of players next summer.
"Pulisic himself seems too level-headed to eye up a move to bigger, more pressurised clubs before he's fully formed as one of those rare attacking midfielders who can make the difference every single time they touch the ball", ESPN's Raphael Honigstein wrote in his report.
"I understand completely this question, I understand you are doing your job, but you know my answer".
But with Arsenal aware of rival interest from United, there is no mood within the Emirates to reduce the price tag.
"This is just my opinion, because in the past City showed if they want to take a player, they go and buy this player".
Conte: There was no transfer talk when I spoke to Sanchez
If a deal can not be agreed with any club, Sanchez will be able to leave when his contract expires in the summer - a situation Arsenal are keen to avoid as they would receive nothing.
"They're both back for us on the training pitch so we're pleased with that but we'll have to make a late decision on whether they will play".
City's reluctance is one more reason United may have the strongest case for signing Sanchez.
"So that slowly is killing the transfers, and you will have more and more players going to the end of their contract because of that". After all, they were determined not to pay over the odds for Kyle Walker last summer but, when it came to the crunch, they stumped up to sign the defender from Tottenham. I wish them good luck because they are going to need it.
"Of course I want a quick resolution", he told reporters at Arsenal's north London training base. When it was put to him that Sanchez would only be sold if a suitable replacement had been found, Wenger said: "You sum it up very well".
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