Arsenal have suffered a potentially fatal blow in their attempts to lure Schalke's Julian Draxler to the Emirates Stadium after the Bundesliga club said the 20 year old would "definitely" stay beyond the summer transfer window.
The Gunners staged talks with Schalke representatives in the January transfer window but were unable to agree a fee below the German international's €45.5m release clause.
Arsene Wenger is expected to continue to pursue Draxler in the summer transfer window in order to strengthen his Arsenal squad ahead of renewed efforts to win the Premier League, after his side fell six points adrift after only drawing with Manchester City at the weekend.
But Schalke chief Horst Heldt said: "I definitely believe that he will be staying at our club for the new season.
"Julian (Draxler) is an important player in our squad, he is playing regular matches and he is doing quite well."
The declaration represents a signficant U-turn from Schalke whose manager Jens Keller said he was unable to plan for the future with Draxler's position at the club so perilous.
"I am delighted that we have him on board for the second half of the season but, because of his clause, he can leave when a club puts the money on the table," Keller said. "That's why I can't plan with him, because it is just not in my or our hands."
Injuries to Jack Wilshere, Aaron Ramsey, Mesut Ozil and Theo Walcott have worked to derail Arsenal's title charge this term, with Chelsea, Liverpool and City in a three-horse race for the championship.
Wenger has been criticised for not signing additional attacking resources in the January transfer window but will reportedly be given £100m in the summer in order to bolster his playing squad.
Having gained a reputation for frugality during Arsenal's nine years without a major trophy, Wenger relinquished the shackles last summer to sign Mesut Ozil for a club record fee from Real Madrid and the Frenchman, should he sign a new contract in north London, will be seeking another marque addition.