The deal would likely include a loan-back clause, similar to the way the club handled Divock Origi last year, and Marko Grujic this week.
If true, the timing would be beneficial to all involved. Coventry are currently sitting in 4th in League 1, two points behind Walsall in the last automatic promotion spot. Were Coventry to achieve promotion, it is likely that Maddison's value would approximately double. Moreover, Maddison is just coming back from a 4-month layoff from an ankle injury, and has only made 23 appearances in all competitions for the League 1 side.
Inexperience aside, Maddison impressed Coventry manager Tony Mowbray enough last season to grant the youngster the number 10 kit.
Coventry likely aren't in a hurry to sell Maddison, given he still has two and a half years left on his contract. Also, no official offers have been made by either the Gunners or the Reds, but it's a situation worth watching in the following weeks.
If you want to see an eerily soundless highlight clip of Maddison, here you go: