The Chilean has just 12 months remaining on his current deal and has been in talks with the Gunners over a new contract for some time.
The 28-year-old is said to be seeking a significant increase on his weekly pay packet of £130,000, with recent reports suggesting that he wants as much as £400,000 a week in order to remain in North London.
Arsenal are refusing to go that high, however, alerting the likes of Manchester City and Bayern Munich to bid for his services this summer.
"It would hit the team quite hard if he left because he's a player who always delivers," Ozil - also in negotiations over a new deal - told Sky Sports News. "It would be a setback to winning the title, but in the end it's the player's decision.
"I hope Alexis stays but I don't know what the status is, to be honest. I value him a lot as a player and he's very well suited to the game Arsenal play.
"From a personal view I'd really appreciate if he stays, but it's the player's decision after all and there's not much more I can comment on that."
Sanchez is currently on his summer break but was front and centre in the promotional pictures for the launch of Arsenal's new third kit earlier today.