Walcott, 23, joined Arsenal from Southampton as a teenager in 2006. His current contract expires at the end of the season. Despite multiple rounds of negotiations, the club and player have failed to agree on a new deal.
That might change "within weeks," according to Goal.com's Wayne Veysey:
The London club are close to reaching an agreement with the England international on an improved deal following fruitful negotiations over the festive period.
Both parties are confident that Walcott will shortly put pen to paper on a deal that will run until 2017.
The 23-year-old rejected a £75,000-a-week five-year contract last August but the new deal is likely to be worth around £90,000-a-week plus top-up bonuses and a multi-million pound signing-on fee.
If this is true, it's good news for Arsenal.
Playing in his preferred central role, Walcott has shown tantalizing glimpses of top scoring form in recent weeks. The hat trick against Newcastle showed his potential to be Arsenal's much-needed match-winning forward. However, as a whole, his performances have been inconsistent and uneven.
Inconsistent or not, Walcott has performed well enough to warrant a new contract from Arsenal. The question here is whether Walcott deserves the £90,000-100,000 per week he reportedly wants.
In a sense, it makes little difference whether Walcott deserves the money or not. Those numbers don't seem far from the going rate—actually, that might be below market value, considering the spending power at Manchester City and Chelsea—for a player of Walcott's stature.
The important part is this: Arsenal are reportedly willing to pay above what they originally offered.
That's good news for fans. It signals that the club might finally understand that to keep players in the squad, competitive salaries are required.
It's a lesson that Manchester United learned way back in the 1990s with Roy Keane's famous contract dispute. Perhaps Arsenal are finally catching on.
Or maybe it's something else.
Would re-signing Theo Walcott be good for Arsenal?
Leaving aside questions of talent and potential for a moment, it's clear that losing Walcott would unsettle manager Arsene Wenger's squad yet again. Following the departure of captain Robin van Persie in the summer, Walcott's exit would disrupt the squad and club further.
On a personal note, I've been ambivalent about Walcott in the past. Early in negotiations, he appeared indifferent about his future with Arsenal. Like many fans, I felt that he could go if he wanted.
Lately, as he has matured and demonstrated his value to the club, my opinion has changed. Besides being a potential match-winner up top for Arsenal, Walcott is now one of the team's most prominent players. After being floored by the loss of RvP, losing Walcott would feel for most of us like a further kick in the ribs.
Wenger has said he doesn't think Walcott is focused only on money (via ESPN FC). Let's hope that—for once—Arsenal, Wenger and the board feel the same way.
At this point with Theo, it shouldn't be about money. It should be about doing what's best for the club.