The former Manchester City star confirmed his desire to leave Madrid, during the 2026 FIFA World Cup, with Barcelona heavily rumoured to be his preferred destination.
That triggered a war of words between the two clubs, with Barca president Joan Laporta confirming the Catalans are keen to sign the Argentina star, but Atletico CEO Miguel Angel Gil Marin has indicated he will accept nothing less than Alvarez's full €500M release clause.
With Alvarez under contract in Madrid until 2030, Atletico are under no pressure to sell, and with Barcelona still balancing a delicate financial picture they could be priced out of the race.
That has reopened the door for Alvarez to potentially return to England as Arsenal eye a bold offer with Viktor Gyokeres possibly included in a deal.
Gyokeres endured a mixed first season at the Emirates Stadium, despite ending the campaign on 21 goals across all competitions, and Atletico are long term admirers of the Sweden international.
As per reports from Cadena SER, Arsenal are still assessing their options of over a player-plus-cash offer, but they would need to make a 'substantial offer' of around €100M plus Gyokeres.