Arsenal are growing increasingly confident they can sign Luis Suarez - and will be buoyed by reports in Spain that Real Madrid have no interest in the Liverpool striker.
Liverpool have rejected the Gunners' latest offer of £40m plus one pound and it is understood they will have to return with a bid that matches the British record transfer fee of £50m that Chelsea paid for Fernando Torres in 2011.
Despite Liverpool owner John W Henry mocking Arsenal's offer by asking what they were "smoking", the latest offer was high enough to trigger a clause in Suarez's contract which allows him permission to talk to Arsenal. The player is now expected to hand in a formal transfer request.
Arsenal are prepared to make Suarez, who scored 30 goals in 44 appearances last season, their highest-paid player on a five-year deal worth £150,000-a-week.
They were expected to face strong competition from Real Madrid but the Spaniards don't appear to be interested in him, despite selling Gonzalo Higuain to Napoli in a deal worth £34m.
The Spanish club's mouthpiece, newspaper Marca, claim the club won't sign Suarez "even if he begged".
Instead Real are to continue their pursuit of Tottenham star Gareth Bale, despite being told told he is not for sale.
Liverpool signed Suarez from Ajax for £22.7m during the same transfer window which saw Torres join Chelsea and they would be making a huge profit by selling him for £50m.
Liverpool boss Brendan Rodgers said: "There was an offer a few weeks ago of £35m and two weeks later it is now £40m and £1. I don't think it is anywhere near the value of what he is worth.
"A player may want to go but then somebody has to pay the value or worth of that player. There will be no games played at Liverpool."