The Premier League champions are ready to go head-to-head with Manchester United for Sanchez, after Manchester City ended their pursuit of the Chilean.
City have pulled out, having refused to meet the financial demands from Arsenal, Sanchez and his representatives.
The 29-year-old almost moved to the Etihad last summer on transfer deadline day, but the Gunners were unable to seal a deal for Monaco winger, Thomas Lemar, as a replacement.
Although City were favourites to land him this month, Sanchez now appears destined to join United or Chelsea.
The Red Devils are prepared to make Sanchez the highest-paid player in the Premier League with a £400,000-a-week deal and will pay a £35million transfer fee to Arsenal.
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