Arsenal are desperate to tie down their star man, who has just 12 months remaining on his current deal.
Sanchez finished as Arsenal’s top scorer in the Premier League this season but his future at the club is in huge doubt.
A host of top European clubs are tracking the forward’s situation at the Emirates.
But despite failing to qualify for the Champions League, Arsenal are prepared to pay Sanchez a lot to keep him.
According to the Daily Mail, their new proposal worth £270,000 a week also includes further incentives.
Alexis Sanchez is wanted by Bayern Munich but Arsenal have made a new contract offer
The contract is apparently loaded with incentives taking it closer to the £300,000 a week Sanchez wants
The contract is apparently loaded with incentives taking it closer to the £300,000 a week Sanchez wants.
Further talks are said to be planned for after Arsenal’s final match of the season – the FA Cup final on Saturday (5.30pm) against Chelsea.
The Gunners’ London rivals are one of the teams who have been linked to Alexis Sanchez, with Antonio Conte a fan.
But Arsenal are determined not to sell to a Premier League rival.
Alexis Sanchez strips off in Arsenal training as key man returns ahead of FA Cup final Wed, May 24, 2017
Alexis Sanchez loses some layers as a key man returns to Arsenal training ahead of their FA Cup final clash with Chelsea
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Alexis Sanchez bares almost everything during Arsenal's latest training session
As a result, the Daily Mail add Bayern Munich are favourites to land Sanchez this summer if he refuses to sign a new deal.
Juventus and Paris Saint-Germain are also keen, but the Bundesliga club are closely monitoring Sanchez’s stance at Arsenal.
The 28-year-old is yet to give confirmation as to what his future holds.