The Sun's headline reads ' Theo + £8m for Raheem', which pretty much tells the whole story.
With Walcott stalling over signing a new deal with the Gunners, the England forward could be on his way out of the North London club.
And Sterling has been identified as the man to replace him, according to the report, after the impressive 17-year-old made his debut for England during the week.
Across London, another player who could leave his current club is Walcott's England team-mate Ashley Cole.
Cole is yet to be offered a new deal by Chelsea and the left-back, who has already been targeted by Paris St-Germain boss Carlo Ancelotti, is now the subject of another of his former boss's attentions.
The Daily Mirror reports that Jose Mourinho, who also managed Cole at Chelsea, is keen on taking the 31-year-old to Real Madrid as he looks for a replacement for Marcelo, who is out with a broken foot for four months.
Current Chelsea boss Roberto Di Matteo would love to sign Radamel Falcao, claim The Sun.
The £48 million-rated Colombian is also being tracked by Manchester City, but is thought to be keen on a move to London.
If a deal goes through for the Atletico Madrid ace, the paper claims it could spell the end of the road for Fernando Torres at Stamford Bridge.
Meanwhile, former Chelsea hero Didier Drogba "will be offered" a return to Europe by Juventus, if the Old Lady qualify for the last 16 of the Champions League.
A report in the Mirror claims the Ivorian, who left the Blues after scoring the winning penalty in last season's final, is already looking to leave Chinese club Shanghai Shenhua, where he has scored 11 in 16 games since signing in the summer.
Juve have been told Athletic Bilbao striker Fernando Llorente is not for sale in January so the Italian champions are prepared to offer Drogba a deal until 2014, worth £4.5 million a year.
Still with Chelsea, doubts persist over the future of Frank Lampard with even Di Matteo admitting he is in the dark, according to the Daily Express.
The Blues boss said the England star could leave Stamford Bridge as soon as January with Chinese club Guizhou Rehne confirming this week they want to sign him when the transfer window reopens.
In other transfer gossip, Liverpool have made a £5 million bid for Thomas Ince - a player they allowed to leave Anfield for free just a year ago.
The Mail reports that Brendan Rodgers hopes to reach an agreement with Blackpool in time to complete a deal at the start of the January transfer window.
And finally, Aston Villa boss Paul Lambert has "refused to rule out" a loan move for Robbie Keane in January, according to The Sun.
The LA Galaxy striker was at Villa Park last season during a break from the MLS side, scoring three times, and Lambert could be tempted to repeat a deal.
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