The veteran striker's current deal is due to expire at the end of the season.
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Sky Deutschland says after initially opening talks about a new deal, Bayern have now dropped their plans.
Given he is on €17m-a-year, Bayern see little benefit in discussing similar terms with Muller as he is now only a bit-part player.
Indeed, it's been claimed Bayern's honourary president Uli Hoeness encouraged Muller to retire: "If he's only a substitute, I would advise him to retire."
Now 35, Muller is weighing up his options ahead of the summer market.
