City boss Pep Guardiola confirmed on Friday that Sane - who has hardly featured this season due to an anterior cruciate ligament injury - would like to leave the Etihad Stadium this summer.
The 24-year-old Germany international has just one year remaining on his deal with City and is linked with a £50million transfer to Bayern Munich.
And a report from France implies Guardiola is already preparing for life without Sane and has identified a replacement in Bailey.
The Bayer Leverkusen star has already been contacted by Guardiola, according to French outlet Foot Mercato, and would relish the chance to play in his team.
However, the report adds that many other clubs across Europe are also chasing Bailey's signature.
Chelsea and Manchester United are among the other suitors for the 22-year-old Jamaica international, according to the Daily Mail.
Bailey, who is contracted at Bay Arena until 2023, has made over 100 appearances for Leverkusen since joining from Genk as a teenager.
He has enjoyed another impressive campaign, scoring 7 goals providing 3 assists in 28 appearances, but his minutes have been limited due to two red card suspensions and a thigh injury.
Bailey can play on either wing and is expected to cost £ 40million - though City will reportedly only sanction the move if a deal is agreed with Bayern Munich for Sane.
Guardiola's side are holding out for a fee higher than the £ 30million bid Bayern were preparing to table, according to German outlets.
Meanwhile, Manchester United are understood to have identified Bailey as a cheaper alternative to Jadon Sancho.
The Borussia Dortmund star - rated at £ 100million - is expected to cost over double Bailey's price tag.
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Saif
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