And Cascarino believes Hudson-Odoi could make Chelsea regret selling him if he is given the opportunity to play at Bayern.
"The 18-year-old is clearly a special talent and they should be doing all they can to stop him joining one of the biggest clubs in Europe.
"Transfer fees are obscene for teenagers but Chelsea should look farther down the line.
"Just look at Jadon Sancho at Borussia Dortmund.
"Chelsea must resist the temptation of selling Hudson-Odoi this month and try and persuade him to sign a new long-term contract - his value and ability is likely to only increase.
"There aren't many players who can skip past players and deliver such brilliant crosses as he did against Nottingham Forest on Saturday.
"He set up Alvaro Morata for both goals and was comfortably the best player on the pitch.
"Chelsea have had little success in establishing their academy players in the first team, which should make them even more determined to keep Hudson-Odoi.
"They know how important it is to their fans to have a home-grown player star for the first team - just look at how the supporters adored John Terry."