According to John Cross of the Daily Mirror, City are ready to offer cash and Raheem Sterling for the Chilean. Jack Pitt-Brooke of The Independent has since reported Arsenal have asked for Aguero to be involved in the deal.
"City contacted Arsenal this morning with their latest offer for the Chilean forward, who they have been chasing all summer," said Pitt-Brooke. "But Arsenal responded this morning by telling City to include Aguero as part of the price for Sanchez."
Pitt-Brooke continued, stating the proposal from the Gunners including Aguero "will force City to consider how highly they value the Argentinian striker."
As reported, the City board have said throughout the summer they will not consider any offers for Aguero, with Chelsea interested in a potential deal. Still, the 29-year-old has been usurped at times by Gabriel Jesus under the tutelage of Pep Guardiola and was on the bench on Saturday for the game against Bournemouth.
Journalist James McNicholas can understand why Arsenal would want to do a player-plus-cash deal in this situation:
However, according to James Robson of the Manchester Evening News, there's no chance the transfer is going to happen:
The deals on the table will also provide an indication into how much the City manager wants to add Sanchez to his squad.
Arsenal's No. 7 has less than a year left to run on his current contract at the Emirates Stadium, and it appeared as though the Gunners were ready to stand firm and keep the forward, regardless of whether they lose him next summer for nothing.
The 28-year-old was the standout player for Arsenal last term, netting 24 times and laying on 10 assists in the Premier League. Losing him would be a huge blow to the club, especially to a potential title rival. But the arrival of a player of Aguero's calibre could soften his exit.
While they are different players in terms of style, the City striker has long been one of the most deadly strikers in the Premier League.
Simon Stone of BBC Sport doesn't believe he should be on the fringes of the team at the Etihad Stadium:
Aguero is a legend at City, having helped the team to two Premier League wins in his time at the football club. While he may not be quite as explosive as he once was, he remains a world-class talent, a leader and a game-winner; as much as City want Sanchez, they surely won't relinquish Aguero's talents.
Arsenal have been staunch in their approach to Sanchez's future throughout the window, and the decision to sell him now would upset plenty of supporters. Even if Aguero or Sterling were to come in, it's difficult to see either player having the type of impression on matches their current talisman is capable of.