The Midlands club agreed on a fee with Watford over the weekend for the signature of the winger.
Sarr was in talks with Aston Villa over personal terms and he was expected to complete a move to the Premier League club this week.
But it emerged on Monday morning that the deal has collapsed due to disagreements over the payment structure between the two clubs.
However, it has been claimed that Gerrard is the figure who made Aston Villa back out of the deal to sign him.
The Aston Villa boss decided against progressing with signing Sarr after holding talks with the player.
He seemingly found an issue with Sarr and decided against wanting to sign the winger despite a fee being agreed.
Sarr is now expected to stay at Watford as none of his other suitors are not prepared to meet the Hornets’ demands.
It remains to be seen whether Gerrard tries to sign a different wide attacker before the end of the window.