The Frenchman finds himself without a job after bringing a 22-year spell with the Gunners to a close.
He has been mooted as a possible successor to Zinedine Zidane at the Santiago Bernabeu, with the Blancos in the market for a new manager following the shock resignation of a man who guided them to three successive Champions League crowns.
Wenger’s vast experience has put him in contention, but it is not expected that he will be handed the reins after turning down approaches from Madrid on several occasions in the past.
“For his own reasons he decided to stay at Arsenal each time, so I don’t see why he would change his mind about that now, even though he’s no longer at the club.
“Also, this is not the word I would use, but Arsene does have a reputation in Spain for losing, largely because of the Champions League.
“The way he would want to manage a club is not the way things work at Madrid either. It is a very political club. The pressure, the way the president is always involved, he wouldn’t have the freedom he had at Arsenal.
“So I don’t think he would be a fit for the Real Madrid job.”
Wenger has also been touted for a role back in his homeland at Paris Saint-Germain.
He would not get the opportunity to prolong his managerial career in the French capital, but he could fill a director of football post.
World Cup winner Petit added: “There was some speculation in France around Paris Saint-Germain as a destination for him, but now they have Thomas Tuchel as coach, so it’s hard to know where he could go next as a manager.
“What I do know is that, at PSG, what’s been missing is authority and respect for the institution. Many Paris players didn’t show respect to the club throughout the season.
“Wenger would certainly help bring that into the club.”