The Gunners could break the bank to sign the Argentine international this summer, although Atletico are desperate to keep their prized asset and will demand over £100 million for his signature.
Atleti captured Alvarez from Manchester City for around £81m in 2024, and he's since become one of Spanish football's leading lights with 49 goals and 17 assists in 106 appearances.
Predominantly operating as a central striker, the 26-year-old plundered 10 goals in 15 Champions League matches this term. According to FootballTransfers, though, Mikel Arteta plans to use him as a left winger, with both Leandro Trossard and Gabriel Martinelli potentially up for sale.
Arteta is a fan of incredibly versatile players, and he displayed such attributes during his time at Man City, with Pep Guardiola waxing lyrical over is ability to adapt when Erling Haaland was the main man.
“I would say there is not one person who is not happy for him," Guardiola said.
“He’s a special guy, with his work ethic. He reminds me a bit of Gabriel (Jesus), how aggressive he is without the ball.
“For Julian, we are delighted because he played a lot and his contribution was amazing for the team, for the way they played. We have a world champion in our team.
“Julian in the away game at Bournemouth scored twice. Teams defend deep against Erling Haaland, he helps Haaland to come into more spaces and create.
“Julian is so important and we need him in these games. In the first half after 30 minutes, I said to my coaches Julian is coming on immediately in the second half.
“We needed him in the middle and he had a chance immediately.
“He can play wider with his vision from outside and he can increase our intensity."
Guardiola's comments from March 2023 have arguably given Arteta even more reason to go all out for Alvarez, even if it means breaking their record transfer fee.