Walcott, 23, has only six months remaining on his current £60,000-per-week contract and will be given permission to negotiate a transfer move to potential buyers. Liverpool, Manchester City and Chelsea are keeping close tabs on the right winger.
Arsenal offered Walcott an improved contract worth £75,000-per-week but the winger is aiming to earn nearly £1,00,000 weekly. Gunners boss Arsene Wenger admitted his frustration during Friday's press conference.
Walcott, who will miss the home clash against West Brom Albion due to injury, remains Arsenal's most effective offensive player despite playing majority of the season off the bench.
However, Arsenal, who are confident Crystal Palace winger Wilfried Zaha will join the club, could cash-in on Walcott with several clubs willing to shell out nearly £10-15 million for the England star.
Meanwhile, right-back Bacary Sagna has expressed his sadness after the club offered only 12-month extension to his current deal. The France international, who earns nearly £60,000-a-week, felt 'disrespected' at the clubs offer.
Arsenal are currently at 10th position in the league standings with only 21 points, their worst start under Arsene Wenger in the Premier League era.