Sancho is Ole Gunnar Solskjaer’s top transfer target this summer, and there have been ongoing negotiations between the two sides over a potential deal for the former Manchester City man.
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“Jadon Sancho will play with us next season,” he said. “The decision is final. I think that answers all the questions. “Last summer we adjusted Jadon’s salary to match the development of his performances. So in context, we had already extended his contract until 2023 back then.”
The Bundesliga outfit want €120 million (£108m/$142m) for the England international, and the two clubs were said to be far apart on their negotiations last week despite claims an agreement had been reached.
United were always prepared to walk away from the deal and pursue other targets if a price could not be agreed upon, one of which is Bayern Munich winger Kingsley Coman.
Dortmund set their own unofficial deadline of August 10 on the deal, and have been insistent that if a transfer was not confirmed by that date then Sancho would be staying.
It is understood United was not willing to be bound by the “unrealistic” deadline and were not rushing to get the deal done by that date.
United have yet to conclude any business in the summer transfer window but are understood to have plans for at least a couple of deals before it shuts in October.
Solskjaer’s side play FC Copenhagen in Cologne on Monday night for a place in the Europa League semi-finals.