Theo Walcott's new contract talks with Arsenal are proving more difficult than anticipated. It was reported that Walcott was close to signing a five-year £50,000-a-week deal that would keep him at Arsenal until 2014, but it is understood that the club's initial offer fell below that mark, says the Telegraph.

Negotiations are still ongoing and, although Walcott wants to stay, there has been frustration that the situation is not resolved, particularly as the £20,000-a-week deal he signed after moving from Southampton expires at the end of next season.

Walcott is understood to be the lowest paid member of Fabio Capello's England squad and his advisers would clearly expect a new deal to reflect his value to Arsenal.

Real Madrid and Manchester City are keeping tabs on developments.