Pierre-Emerick Aubameyang has a one-year extension clause in his current deal with the club, according to the UK Mirror.
The Gabon striker’s £180,000-a-week deal expires next summer, but his contract includes a 12-month extension clause, which must be triggered by December 31.
However, if the Gunners trigger it, Aubameyang’s wages would go up significantly and with a bonus, could cost the club around £20m for one season.
Arsenal want to offer him fresh terms to remove that financial penalty.
The club will this week, open serious negotiations now they know their spending power after winning the FA Cup and qualifying for the Europa League.
Aubameyang wants a three-year deal worth £250,000-a-week and the club are ready to make a huge financial push to keep him.
The 31-year-old is attracting interest from the likes of Inter Milan and Barcelona.