Sanchez denied the rumors linking him to Bayern Munich after becoming Chile national team top scorer when he scored his last goal against Germany with Bayern now out of the way i see him either going to Manchester City or Chelsea because he got just one year left in his contract with Arsenal so it is the same scernario like Robin Van Persie When united snatched him with nit so large fee . I think Sanchez will want to win the Premier league and both those teams can be a strong contendors for that title next season City made many changes from last season and Chelsea is not clear vision yet but i expect from them to fight to retain the title.
Sanchez still has one more year left on Arsenal, and Arsenal still needs Alexis Sanchez's services. We have to admit, Sanchez is carrying a very heavy burden on Arsenal, his role in the team is very important. I'm not sure Arsenal can find a proper replacement, not many players like Alexis Sanchez.
It would be stupid for the Gunners not to sell Sanchez away to a club outside of the EPL. He has only one year left as said and he doesn't want to sign a new contract. The club has no choice but to cash in on him now than to risk him becoming a free agent next year and would sign vs their league rivals anyway.
But let's see what Lol_Wenger would do.

If indeed Sanchez had to get out of the arsenal, Arsenal is not only stupid if it does not sell sanchez to the outside team England, but also very crazy jila Arsenal release Alexis Sanchez their rivals in the Premier League. We know how Sanchez plays a role in Arsenal, if Sanchez is released to rivals such as Chelsea, Man United, Liverpool, Arsenal made a very fatal mistake since then.
Yeah, that would be terrible for Arsenal. I guess what they will do is keep him, offer him a good team and then try to negociate a prolongation.