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Players often have extremely aggressive and unrealistic contract demands when you're trying to extend their contract. Try again later when your player's mood has improved significantly. But keep in mind that he may continue to have extremely high demands until he actually gets to free agency. When that happens, you'll often see his demand decrease dramatically, although it's no guarantee. That's when you can often re-sign a player for much better terms, but first you have to take the risk of allowing him to become a free agent.
Usually I can re-sign players, even if they get upset and don't want to negotiate for a while. Later I try again, and I try to find the right balance between the number of years and the money. One thing that seems to help is to use team options, sometimes for multiple years. You can use this to make the contract look much more attractive and lucrative while minimizing team financial risk. You have to offer buyout terms for those years, but you can win them over with this tactic.
Otherwise, you might need to wait until they file for free agency to get a much better deal. If you think about this, it makes perfect sense. If you want to re-sign a player without him having any chance to go onto the free market, he's going to demand a premium for that. Not all players do, but stars will almost always do that in OOTP. At least that's my experience with game more recently.
If you can't sign them and they become free agents, then they'll go on the market, and the offers they receive will often determine their true value. And often it will be considerably less than they were demanding while they were still under contract.
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