Arsenal fan here, not posted in a while, just having a read through from your end of the Sanchez situation.
I still think that this can go 1 of 3 ways. I'm not taking Wenger comments about him and Ozil staying as gospel, I seem to remember him saying similar comments about Cesc and Nasri, something along the lines of you don't sell if you are a big club, low and behold a few weeks later they are away.
From my point of view, I'd try and make Sanchez stay the extra year regardless. We need a top striker first and foremost, and that will prove difficult enough for us. I've little confidence of Arsenal being able to do that and replace Sanchez adequately in the 1 summer. If I thought they would, I'd be more open to selling him. It also depends how much of a fuss he potentially kicks up though. Will he begrudgingly accept the decision, or will he strop and kick up a stink? We'd obviously need to try and gauge that.
Now, obviously from an Arsenal perspective, it would be preferable to sell him if we had to to Bayern. Players heads always get turned while on international duty, so you can imagine that Vidal is in his ear in the quiet moments. Now Bayern won't pay him what tus or you can, but I'm wondering if some sort of arrangement could be made where they pay slightly less of a transfer fee for a bigger signing on fee.
So there's a few different things that need answered. Would he stay and accept it? Is it City or only City if he moves, or is he open to Bayern?
It would be interesting to see how he adapts his mentality at City (or Bayern even). This is a guy that insists on playing every game, even against the likes of Lincoln. He often sulks when not playing, and sometimes even when he comes off as sub. He'd obviously not get that at City if the likes of Sane, Aguero, Jesus, Sterling and Bernardo need to get game time. Be interesting to see how accommodating he is off that.