Manchester City will fight to keep hold of James Milner by offering him a lucrative new contract, reports The Sun.
The England international is considering his future at the Etihad Stadium after falling down the pecking order to become somewhat of a bit-part player.
With just one-year left on his contract, Manchester City would be forced to consider selling Milner this summer or risk losing him for nothing next year. Manuel Pellegrini is determined to hold onto the 28-year-old and is hoping to extend his contract.
Arsenal are monitoring the situation with reports claiming that Arsene Wenger will launch a £10m offer in the coming days. Wenger is hoping to strengthen several areas in his squad this summer and Milner, who also counts as a homegrown player, would be a valuable asset at the Emirates Stadium.
In fact, his homegrown status probably goes some way to explaining why Manchester City are determined to hold onto to Milner. Amongst some of the expected player departures this summer are Gareth Barry, Joleon Lescott, Micah Richards, Jack Rodwell and Scott Sinclair - all homegrown talents.
Losing Milner would leave Manchester City with few other homegrown stars to fulfill the required eight that must be included in their Champions League squad, which is likely to be reduced to 21 because of Financial Fair Play violations.
But Milner is reportedly tired of his lack of opportunity at the Etihad and now has options in the form of the Gunners and also Liverpool.
Brendan Rodgers is looking to add significant depth to his squad for next season as Liverpool look to deal with the rigours of Champions League football once again.
Milner could add versatility and defensive stability to Anfield and the Emirates and both Arsenal and Liverpool will keep an eye on Milner's contract as the situation develops.