Uefa Champions League, Third qualifying round, second leg/Arsenal (3) v Dinamo Zagreb (0), Emirates Stadium, 8.05: Arsenal will not match Chelsea's existing £70,000-a-week wage offer to entice William Gallas away from Stamford Bridge.

Arsene Wenger confirmed for the first time yesterday that the Gunners had offered £5 million for the France international last week and are still hopeful of including him in the deal that will take Ashley Cole to Chelsea.

However, since it was the retraction of a £60,000-a-week contract that led Cole to demand a transfer, the Arsenal board has found it impossible to authorise an inflated salary for his replacement.

"We have not spoken to the player (Gallas) yet," said Wenger. "You need to agree personal terms. We have a salary cap here and he comes from a club where there is no salary cap. So I don't know if it's possible to agree personal terms, and if it's possible to agree with Chelsea. If he comes here, frankly, he will have to come for less money."

Though Arsenal have moved to the 60,000-seat Emirates Stadium, doubling matchday revenues, the taxman's clampdown on paying players' bonuses from offshore companies has restricted their capacity to match Chelsea in salaries.

Given that Gallas has rejected Chelsea's £70,000-a-week offer on the grounds that it is not commensurate with his value to a team featuring several £120,000-a-week players, it would seem superficially that Arsenal's position could cause the deal to collapse.

However, Chelsea's relationship with Gallas has worsened to the point of breakdown after fresh friction between the player and the Premiership champions' chief executive, Peter Kenyon, over pay talks.

Kenyon has exercised his authority by banishing the World Cup finalist to Chelsea's reserve team, a move endorsed by the manager, Jose Mourinho. Since Arsenal can offer Gallas first-team football, financial demands may become a secondary consideration for the 29-year-old.

The hardest part of the negotiation remains reaching agreement with Chelsea, who still want a straight swap between Gallas and Cole. Arsenal believe that would undervalue their 25-year-old England left-back, but Wenger would not rule out the possibility that it might yet happen, saying only that he does not wish to conduct the bargaining in public.

What is becoming increasingly clear, with Cole omitted from Arsenal's squad for the second leg of the Champions League qualifier against Dinamo Zagreb - which Arsenal lead 3-0 - so as not to leave him cup-tied, is that the defender has no future at the club that developed him.

"I am very keen for it all to be resolved because you want your squad to be settled and focused," said Wenger. "What is important is the players on the pitch, those who play and make the club successful. What is important inside the club is players who are focused on targets, and players who are half in and half out cannot be focused on the targets of the club - that is understandable.

"I would not say that it is damaging at the moment, but it is not helping. In the longer term it is of course damaging because you want everybody to go in the same direction all together. That can only be done when people feel completely committed to the cause."

Though Cole may leave irrespective of whether he can be replaced, Wenger is confident an alternative can be recruited with West Bromwich Albion's Curtis Davies a consideration.

"Gallas is not the only player we have a chance of getting," said Wenger.

Wenger was encouraged by the performance of Theo Walcott after the 17-year-old England international's first introduction to Premiership football against Aston Villa on Saturday. With Tomas Rosicky and Jose Antonio Reyes injured, the Frenchman has scant alternative options on the left side of his team.

Wenger, however, is adamant Reyes will stay at Arsenal unless Real Madrid offer the right price.

Reyes has publicly said he would like to join Real, who are reported to have offered £8.5 million for the 22-year-old. But the figure falls way below Arsenal's valuation of the player.

Wenger may not, however, draw on Walcott's talents for tonight's match at the Emirates Stadium, though his caution is not due to want of confidence in the player, but rather to protect him from barbs such as Steven Gerrard's that Walcott should not have been at the World Cup.

"When you are good enough to go to Arsenal, you are good enough to play in the England team, because there are many players who play for England who would not play at Arsenal," retaliated Wenger.