The Gunners have been heavily linked with the Brazilian this summer, but they suddenly look unlikely to pull off a deal.
Jesus is likely to leave City this summer, with Erling Haaland agreeing a deal to join the Citizens.
And he could have options after a solid season, helping City to retain their Premier League title.
But according to Cadena Ser, City have actually had to offer him out to two Spanish clubs.
It’s claimed Atletico Madrid and Real Madrid have been offered the chance to sign Jesus, and the player wants a £4.3m-a-year wage after tax.
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That could be an issue for Arsenal, but Jesus is still said to be near the very top of their wishlist, as per the Daily Mail.
Whether the Gunners will be willing to pay that wage is another question.
But Atletico do need a new striker, with Luis Suarez moving on this summer, while Real Madrid have just missed out on Kylian Mbappe.