Portsmouth boss Harry Redknapp will return Manuel Fernandes to Benfica as his £12m asking price is too much.
Fernandes is a highly-rated prospect in Portugal
Fernandes, 20, was signed on a season-long loan in the summer but will now return to Portugal in January.
"The fee is £12m and I don't want to pay £12m," said Redknapp. "I've spoken to Manuel about it and even he thinks the price is too high."
Fernandes did not play at Arsenal as a permanent deal would be triggered if he plays three Premiership games in a row.
Redknapp added: "All I know is if he starts three Premier League games in a row, a permanent deal clicks in. I didn't do the deal. It wasn't my idea. I inherited it."
Redknapp also defended the club's owner Alexandre Gaydamak over criticism he has not invested more money in the Fratton Park squad.
"Sacha is a terrific young fellow and he's given me terrific support," said Redknapp.
"We have a good relationship and he has never interfered. I think that if I went to him to get a couple of players (in January) he will be there. The owner will back me. That is not a problem.
"He didn't tell me not to play Fernandes at Arsenal. The player was ill anyway, but I wouldn't have played him on Saturday.
"He's a good player and for the right fee I would buy him. He's a young kid with potential, but I couldn't put my name to £12m for him."