Gelson emerged as a target for United and Real Madrid this week following reports in Portuguese newspaper Record.
The winger impressed during Sporting's 2-1 Champions League defeat to Real earlier this month and is said to have caught the eye.
Sporting have reportedly been trying to tie the 21-year-old down with a new and improved contract.
However, Portuguese outlet Correio da Manha claim negotiations have now broken down due to a disagreement over wages.
Gelson is said to be demanding around £9,000-a-week - more than double his current earnings which stand at just £4k.
But the club called off a meeting yesterday with Gelson's agent Ulisses Santos because they felt his wage demands were too high.
United and Real would certainly have no issue matching such meagre wages given the high earners on their books.
However, Gelson is said to have a hefty £52million release clause in his contract with runs until June 2021.