Arsene Wenger has admitted that Arsenal are in talks with Zenit St Petersburg to sign Russian playmaker Andrei Arshavin, and expects a deal to be done before the end of the January transfer window.
''We are not close to signing him today, but yes were are in negotiations [with Zenit for Arshavin]. I'm very hopeful,'' Wenger told a press conference on Thursday.
Despite interest from various clubs in both Italy and Spain Arsenal have emerged as the favourites to land the £20 million-rated 27-year-old who starred in EURO 2008.
Meanwhile, Wenger believes that Manchester City's £100 million move for AC Milan's Brazilian star Kaka would create a ''disturbance'' in the transfer market and suggest City are not operating in the ''real world''.
City remain hopeful of landing Kaka, with wages of a staggering £500,000 said to be on offer.
With the Manchester club bankrolled by the vast funds of owner Sheikh Mansour of the Abu Dhabi United Group, who took over in the summer, Wenger accepts that they, just like Chelsea in the past, operate outside the normal parameters.
''It does not look real to me at all,'' said Wenger.''It does not look in connection with today's world because on one side we have the economic situation which is quite worrying. We live in a football club who lives in the real world. That means we spend the money we make from our income.
''The implications would be disturbance on the market, an inflationary trend in a deflationary world.''
Wenger maintains the traditionally-prudent Gunners will not break the bank to aim to compete with the spending power of City.
''It leaves Arsenal where we are. That means we spend the money we produce and we make,'' he said. ''We are in a world where we live from three kinds of income - gate receipts, the sponsors and the television money. That is the real world of football.
''The rest is exceptional and is not the rule of our world. It is a special income with unlimited resources, but it is not the real world. Manchester City are in a different world because they do not live with their income.''