Sanchez, 28, is in the final year of his deal in north London and is reportedly demanding a weekly wage of £400,000 in order to remain a part of Arsene Wenger's side. The Chile international recently stated that his future is "clear", but questions still remain over where he will ply his trade next season.
Arsenal have shown that they are not afraid to spend heavily this summer, as evidenced by their club-record purchase of Alexandre Lacazette from Lyon earlier this week. And while most clubs around the world would balk at paying a player such an astronomical sum every week, Murphy has urged Arsenal to shell out for Sanchez or risk buying an expensive, inadequate replacement.
"What Sanchez is demanding, that's the going rate because he can get that elsewhere," Murphy told talkSPORT. "The simple equation is this: £400,000-a-week is £20m a year, over four years that's £80m.
"To sign a player to take his place, it's going to cost you at least £60m or £70m, and that's if you can find one. But Arsenal can't replace Sanchez with someone of his quality, because someone that good won't go there."
Manchester City, one of the few teams in the world who would be able to fulfil Sanchez's exorbitant demands, are believed to be confident of striking a deal for the former Barcelona star – who is keen to reunite with Pep Guardiola.
Bayern Munich were another team believed to be interested in signing Sanchez but club president Uli Hoeness rubbished links, suggesting that his the former Udinese wonderkid's requested salary is 'not feasible'.
The Gunners would be loath to lose Sanchez and are still hoping to tie him down to a new long-term contract at the Emirates Stadium, but with a move for Leicester City's Riyad Mahrez believed to be close to completion, Wenger may have accepted the fact Sanchez has played his last game for his side.