The German star was expected to sign a new contract with the Bundesliga champions, but he has made a surprise U-turn after changing his representative to Pini Zahavi.
Sane is eyeing a much bigger contract in terms of wages at Bayern, but the Munich giants are adamant that they won't improve on the proposal.
Hence, he is likely to leave on a free transfer when his contract expires on June 30. Sane would prefer a move to the Premier League this summer.
Arsenal were already in contact with the player's former representative and they remain in the race. They have been joined by Newcastle United.
Sane is eyeing Champions League football at his next club. He would prefer to move to London but Newcastle is regarded as a good alternative.
Manchester United have also been credited with an interest, but Sane could be reluctant to join them, having played for rivals Manchester City.