Real Madrid president Ramon Calderon insists Arsenal hold the key if they are to sign Jose Antonio Reyes from the London club.
Reyes signed a new Arsenal contract last season
Calderon said signing Mahamadou Diarra from Lyon was the club's priority.
"Reyes will come only if Arsenal meet our conditions," he told Spanish daily AS. "I'm not going to waste a euro.
"I feel sorry for the lad if the deal doesn't come off, but we've no arrangement to sign him at all costs. Arsenal will have the last word."
Real Madrid create unrest everywhere. They just destabilise the players and that is why we are not very happy
Arsenal boss Arsene Wenger
Reyes, 22, did not play in Arsenal's win over Dinamo Zagreb in the Champions League and it seemed he was set for a move to the Bernabeu after not being cup-tied.
"My dream of wearing the Madrid shirt is growing ever nearer," Reyes said recently. "It's hard to stay calm at a time like this.
"Madrid's offer cannot be turned down. Now all that is left is for the offer also to be good for Arsenal."
Arsenal are believed to want £16m for the winger or Julio Baptista to move to the club as part of any deal.
But the two clubs appear to be at a stand off as negotiations threaten to collapse.
But Reyes added: "The coach knows that I have had problems in adapting to the lifestyle in England.
"If agreement isn't reached, it will be bad for Arsenal and for me."