The 63-year-old says that he is "happy to pay Theo the money he deserves" and has urged him to remain with the Gunners with the England international still to sign a new dealArsene Wenger has urged Theo Walcott to reward the faith Arsenal have shown in him by signing a new contract at the club.
The 23-year-old's current deal expires in the summer and, as yet, he has refused to sign a new deal reportedly because of disputes over money and playing position.
The Gunners' boss has remained confident, however, that he will not lose the former Southampton man, despite the situation reportedly putting the likes of Manchester United, Chelsea and Liverpool on alert.
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"What is important to keep the young players together is that at some stage I have stood up for them; I played you at 17, 18, 19 years of age and I know I took a gamble," he told reporters.
"It is easier to take a player of 25 and put him in the team. You know what you are getting.
"If you put them in at 17 or 18, you have to stand up for them. You risk losing games while they are learning their job. Once you have produced them you want to say, 'Okay, let's stay together and win together.'
"Somewhere along the line they need to give back to the club what the club has given to them.
"When a guy gets to 30, you can understand it is his last contract and if he feels he wants a change.
"This is a more sensitive age, but basically, it is a reward for our policy."
Reports have suggested that the England interational is demanding around £100,000-a-week to stay at the Emirates, but Wenger declared he will not be held to ransom having already paid large amounts of money to sign him.
The 63-year-old added: "I am happy to pay Theo the money he deserves, but I feel as well that I bought him at 16 years of age and spent a lot of money on him.
"I am a big supporter and I believe he is happy here. Theo has always looked to me like he is an Arsenal man."