The 31-year-old remains locked in a contract stand-off with the Gunners, and looks set to leave the Emirates at the end of the season.
Sagna is said to be demanding a significant pay rise from his current £50k a week wages, as well as a three-year extension if he is to stay in north London.
Arsene Wenger is reportedly ready to make an exception of offering a two-year deal to a player over 30, with Sagna having proved his worth on many occasions this season.
But the French international is holding out for a three-year deal, something City are willing to offer, as well as a significant pay rise.
It means Sagna could be set to become the latest in a long line of players to swap Arsenal for Manchester City.
Emmanuel Adebayor, Kolo Toure, Gael Clichy and Samir Nasri all made the switch between 2009-11, while former Arsenal stars Patrick Vieira and David Platt have been employed by City in other capacities.
Sagna is yet to decide on his future, and has not ruled out staying at Arsenal if they meet his demands.
But the Frenchman is in a strong position to bargain, with the likes of Liverpool, Tottenham, Monaco, Inter Milan and Galatasary all keen to sign him on a free transfer in the summer.