Jose Mourinho wants Vinicius Junior to stay at Real Madrid, who are working on talks to extend his contract, talkSPORT understands.
Real are determined not to lose their superstar on a free and they hope he'll sign a new deal, with progress being made this week.
Vinicius Junior celebrates scoring for Real Madrid
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Real Madrid are hopeful that Vini Jr will sign a new contract rather than leaveCredit: Getty
Arsenal only ever explored the idea of signing the Brazilian internally and always knew the Spanish giants wanted to keep him.
It means the Gunners' hopes of signing Vinicius Jr. appear to be slipping following their initial interest in the winger.
The Premier League champions had contemplated making a move, but he was only a transfer option and not a key target.
talkSPORT reported on Monday that they have the finances available to make Vini Jr. their highest-paid player and they were prepared to open talks if they were given any encouragement from him.
Reports claim the 26-year-old Brazilian has been seeking as much as €550,000 (£470,000) on his next contract.
That would see him overtake Bukayo Saka as Arsenal's highest earner by a massive margin, with the England international earning £300,000 a week.
However, with Mourinho wanting to keep Vini Jr. at Real Madrid, his move to North London is looking unlikely.
He was also offered to Liverpool, but they opted not to pursue him - and he could now sign a new deal at Real soon.
If Vini Jr stays in Spain, he will be part of a squad that includes multiple new faces signed by Mourinho this summer.
Yan Diomande is set to join from RB Leipzig, following Bernardo Silva, Marc Cucurella, Ibrahima Konate and Denzel Dumfries through the door at the Bernabeu.
Real Madrid head coach Jose Mourinho, wearing a white shirt and pink bottoms, stands with his hands in his pockets during a pre-season training session.
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Mourinho wants to keep his Brazilian superstar at the club this summerCredit: Getty
Arsenal manager Mikel Arteta, wearing a dark grey polo shirt, looks on during the Champions League final against PSG, May 2026.
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It means Arsenal are set to miss out on another big name they were interested inCredit: Getty
Missing out on another star
Arsenal have been hoping to bring in a star forward this summer, but they are now set to miss out on another target.
If Vinicius Jr. doesn't make the move and stays at Real Madrid, the Gunners will have failed to sign him or Morgan Rogers.
Mikel Arteta had been eyeing Rogers and the club were understood to be preparing a bid for the England international.
However, London rivals Chelsea swooped in to sign him for a record-breaking £117million last week.
It leaves Arsenal still searching for a big-money arrival, with a move for Vini Jr. now not expected to materialise.
The Gunners have already signed Christos Tzolis from Club Brugge as a replacement for Leandro Trossard, who joined Besiktas.
They have also brought in goalkeeper Illan Meslier on a free transfer and signed Piero Hincapie on a permanent deal.