Negotiation tactic. First of all, they don't really care about our emotions tbh - we're just another club to them.
They are saying that the deal is off because that is their last bargaining chip. Backing off from the deal is a big part of negotiations.
Both sides are playing a game and its simple. Dortmund want us to cough up 120m, we don't want to pay premium. We want a reduced price (because of Covid, image, etc.), and Dortmund is testing our resolve.
The mistake we made was that, we made the whole world aware that Sancho is our top target, our BIG signing. That is the only point in Dortmund's favour. No way that Dortmund is going to budge now.
My assumption is that final discussions will be taking place very soon (if not already under way). It will follow something like this:
Ed : Look Zorc, we want the player, you want to sell. Can we just make the deal for €100m with everything?
Zorc: We've quoted 120, Ed. Pay 120 and you can have him.
E: I wish we could Zorc. Every club took a hit after Covid. We could've paid 130 if things were normal. The best we can do, and I am literally stretching my budget here... 105. Final offer.
Z: We took a hit as well, don't forget. Look Ed, Let's cut it short... For you, just out of respect for another club and taking Covid into account... 115. That's it!
(Pause between both. Ed is frustrated as hell. Zorc is cool)
Ed: (Sigh) Can we make a deal today? Right here? You and me?
Z: That's what we want as well.
E: Great. Then tell me the price, with which we can complete the deal.
Z: 115.
E: Ok Zorc, listen... I've raised all I could. I am literally at my last penny for this deal. I have to sell Lingard as well just to fund this... 110. Deal or we walk.
Z: Hmm.. I don't know. Its difficult. I have to think.
(Makes doodles on his notepad, calls someone and speaks in German. Shakes his head.)
Z: (Sigh) Alright Ed. We have a deal.
I am not kidding. This is literally the way these things go in layman's terms.