Wenger will give the Gunners board six months to come up with a significant transfer chest that he needs to rebuild his team.
One friend told The Sun: “Arsene is fearful that the current squad is still too young to compete with Chelsea, Manchester United and Liverpool for the title.
“It’s obvious he needs to bring in some experience but has been told he must sell players to generate money to buy players.
“Arsenal have had to fight to make fourth in the past two years and Arsene knows that’s not good enough — but he feels his hands are tied.
“The departure of David Dein was a huge blow to him and he feels he can only wait as long as the turn of this year to see if things improve.
“If not, he is very unlikely to renew his contract.”