Arsenal boss Arsene Wenger is ready to offer Carl Jenkinson an improved deal but still expects the defender to leave on loan, reports The Mail.
The 23-year-old spent the whole of last season on loan to West Ham and quickly established himself as an important player under Sam Allardyce.
But while he was lighting up east London, a Spanish teenager called Hector Bellerin was busy establishing himself as the best young right-back on Arsenal's books.
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Bellerin's emergence coupled with the continued presence of Mathieu Debuchy left Jenkinson with little or no future at the Emirates with reports tipping him to leave on a permanent basis.
West Ham were keen to sign him and were ready to pay upwards of £7m while other reports suggested Arsenal were looking for close to £10m.
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Lots of interest
It now seems as if Jenkinson's fine form has convinced Wenger that he may well have a future at the club and is ready to give him a pay rise on his current £35,000-a-week.
However, the one-time England international is still expected to leave on loan with West Ham still interested in another temporary deal after failing to agree a permanent one.
They will have to compete with Southampton though, who are are looking to replace their recently departed defender Nathaniel Clyne.
Sunderland have also showed an interest and had offered Arsenal a £2m loan fee, an offer that was accepted. However, Jenkinson, obviously a London lad through and through, rejected the chance to move to Wearside.
Arsenal's decision to give Jenkinson a new contract is nothing out of the ordinary for a player about to leave on loan. In fact, it is actually club policy for players to extend their contracts before leaving on temporary deals.
Joel Campbell was essentially forced to extend his contract before leaving for Villarreal despite the fact he was never likely to play for Arsenal again. He is still at the club but is up for transfer this summer.
Arsenal's decision to extend Jenkinson's contract may just be a safeguard should they decide to sell next summer, but it indicates that Wenger sees him as a future first-team star, potentially after Debuchy's contract expires in 2018.
As a homegrown player, Jenkinson's presence in the squad will always be of added value to Arsenal, hence why they are likely to keep him on the books, if not the squad.
Should Arsenal keep Carl Jenkinson at the club or send him out on loan again?
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