Arsenal have told Folarin Balogun he can leave the club this summer.
The 19-year-old striker is one of the most highly-rated youngsters at the club and led the way for the Under-23s this season, scoring 10 goals in 15 appearances.
But he has yet to feature for the senior side and, as first reported by The Athletic and since confirmed by Goal, he now looks certain to leave in the coming transfer window after talks over a new contract broke down.
Balogun signed his first professional deal in February 2019, but that contract will expire in the summer of 2021.
Talks have been taking place to try and extend his stay, but discussions between the club and the forward's representatives have been unable to come to a successful conclusion.
So Arsenal have told the striker he can leave at the end of the season, with the club now focusing on securing the best possible price for the academy product, with any deal certain to include a hefty sell-on clause.
The Gunners rejected a £5 million offer for Balogun from Championship promotion hopefuls Brentford in January and had hoped at that point that they would be able to reach an agreement with the teenager over extending his stay.
Sources have told Goal that Arsenal wanted the England youth international to sign a performance-based deal, one that the club believed could have been very lucrative for the player should he go on to hit the targets set out in the contract.
But Balogun’s representatives would not accept the terms offered and Arsenal decided that a line had to be drawn in the negotiations and brought them to a halt - with the club mindful that they already have Tyreece John-Jules and Eddie Nketiah in and around the first-team set-up.
Using performance-based deals to try to motivate youngsters to achieve success is something that is becoming more common-place at Arsenal, with the club believing they give players a real opportunity to earn a lot of money if they hit the objectives set out in the contract.
But they are not always received well. Teenage winger Xavier Amaechi left last summer after failing to agree to terms offered by Arsenal, opting instead to join Hamburg in Germany.
Arsenal received an initial £2.25m for the 19-year-old, but that fee could increase by several million depending on Amaechi’s progress with Hamburg. The Gunners also had a substantial sell-on clause inserted in the deal.
The north London club will now attempt to agree a similar sort of deal with any club looking to sign Balogun, with the Gunners determined to ensure they are well compensated this summer for losing one of their brightest young talents and also in the future, should he go on and be a success elsewhere.