Roman Abramovich told John Terry that he will not be allowed to leave Chelsea and that the club will not match the extraordinary £280,000-a-week offer from Manchester City in a tense meeting between the pair on Saturday evening.
Chelsea will now try to make the player an offer that will placate him – a rise on his £135,000-a-week and a longer contract than his current three years – in the hope that he will sign, although there are no guarantees. The meeting on Saturday was understood to be frosty with Terry telling Abramovich that he wanted the club's permission to talk to City – essentially signalling his desire to leave. Abramovich refused to yield.
The England captain will be in training today for a double session at Cobham with their manager Carlo Ancelotti but he is considering his next move. He recognises that refusing to play for Chelsea is not an option and he has no intention of going on strike. He wants the situation resolved before the pre-season tour of America which departs on Thursday.
While Terry realises that it is a difficult situation for Chelsea – they have rejected one offer of £30m from City – he now wants the chance to join a club who have set their stall out as Premier League contenders. He feels that the 17 years he has given the club as schoolboy and professional is sufficient service and that he should at least be allowed to speak to City directly.
He now has one major option left open to him which would be to go public with his dissatisfaction with the club in a newspaper interview and try to force them into selling him. Chelsea are still hopeful that will be avoided and some kind of resolution can be reached today.
Terry told Abramovich that he wanted to be given the chance to speak to City because it was a financial opportunity that he could not pass up, either for himself or for his family. On offer from City is a staggering deal worth £280,000 a week that will last four years at least. He currently has a deal that will pay him £21m (£135,000 a week) over the next three years – not bad, but after it expires there is no guarantee that he will earn the same.
Terry also told Abramovich that he was unsure of the future for Chelsea and whether the owner would continue to fund the kind of transfers that would allow the club to keep pace with the likes of City, Manchester United and Liverpool as well as Real Madrid.
Terry is unhappy at how long it has taken to get an audience with Abramovich and feels the club's very robust public stance, adopted at the press conference to present Ancelotti, has not helped matters. He does not feel the same rules have been applied to Deco and Ricardo Carvalho. Both have been agitating for a move this summer and neither turned up at Wembley for the FA Cup final in May.
Chelsea now find themselves in an acutely difficult position – although one in which they have placed other clubs over the years – where Ancelotti's new regime faces chaos before the season has even begun. The reaction from supporters to selling the captain would be hostile to say the least, even if the club made it clear that the responsibility for it fell squarely upon the shoulders of Terry.
The discussion is now being conducted directly between Terry and Abramovich, who met in Wentworth, Surrey, after the 28-year-old had attended a charity event with Right to Play, Chelsea's international charity partner. Terry recognises that whatever the likes of Chelsea's chief executive, Peter Kenyon, director Eugene Tenenbaum or Ancelotti say, only Abramovich makes the big decisions.
City have been quiet over Terry this week, preferring to allow the player himself to try to negotiate a way out of the club. They have been told that there is no price that will get the player, although that was before the conversation between Abramovich and Terry on Saturday. If the Russian decides to cut his losses and sell Terry then he will want more than the initial £30m bid, an extraordinary price for a 28-year-old centre-half.
While City expect to present Carlos Tevez as their latest signing this week, they also hope to put together a new, improved offer for Terry that will focus Chelsea's minds on selling the player. Regardless of whether they land the player or not, they have caused chaos at a club that will be one of those sides they hope to overtake for a Champions League place next season.
Manager Mark Hughes is with the squad in Germany on pre-season training but is prepared to return to speak to Terry. The City executive chairman, Garry Cook, is expected to offer Terry the kind of deal that was prepared for Kaka in January, with a signing-on fee and even a charitable institution in the player's name.
In the meantime, Chelsea have further muddied the waters in their hierarchy of command by promoting Frank Arnesen to sporting director. Formerly operating under the title of director of youth development and chief scout, the Dane now seems to be treading on Kenyon's toes. Chelsea said yesterday that Arnesen would report to Kenyon but "help assist the overall long-term football and business strategy of the club".
As head of the club's academy Arnesen has been spectacularly unsuccessful, squandering large transfer fees on unproven teenagers whose talent has failed to materialise. However, despite planning an exit strategy last season, he seems to have kept his job.
Terry's all gold: How the defender could spend 40k a day, every day
*Should John Terry make the switch to Manchester City on £280,000 a week, the 28-year-old will "earn" £40,000 a day. But what could the defender spend his daily wage on?
*Gents 18ct Rolex Oyster watch With diamond dial and bezel
*Marble bathtub Similar to the one brought by Jonathan Ross for £40,000 last year
*Nine bottles of Krug Clos d'Ambonnay champagne £4,250 each at the Ritz
*69 Man City Season Tickets of the most expensive at the club
*Newcastle United at £100m (after seven years)
*Fly from London to Manchester (return) 533 times
*Debenture seats for himself and 14 friends for men's finals day at Wimbledon next year
*Three Ecosse Heretic Titanium motorbikes (£13,333 each) – not that he'd be allowed to drive them
*Two Mini Cooper convertibles At £19,000 each, he could buy one for both his mother and mother-in-law