We will not pay £1 more for Cole, says Mourinho

Chelsea last night took the game of brinksmanship between themselves and Arsenal over the transfer of Ashley Cole to new levels by declaring that the price was "too high" and they had broken off negotiations.

In a statement the Premiership champions said: "Chelsea FC has been in discussions with Arsenal Football Club for some time over the possible transfer of Ashley Cole. Chelsea has made a very substantial offer for the player. Although discussions have continued, Arsenal's valuation of the player does not match Chelsea's and therefore no agreement can be reached in the current circumstances."

Further talks took place yesterday between Chelsea chief executive Peter Kenyon and Arsenal vice-chairman David Dein at which the impasse could not be broken. It is understood there is a gulf of up to £9m between the sides with Chelsea still hoping to pay £16.5m, although they may go as high as £20m, and Arsenal insisting on no less than £25m. Last night a source confirmed the difference was "more than £5m". During the talks it is believed that Arsenal implied that they would field Cole in the return leg of their Champions' League qualifier against Dinamo Zagreb because they are so exasperated by Chelsea's refusal to meet their asking price.

If Cole plays in the fixture in two weeks' time he will not be eligible to feature for another club in the competition which would reduce his chances of leaving Arsenal this season. Manager Arsène Wenger had set a deadline of the end of this week for the 25-year-old's future to be resolved ­ a deadline that Chelsea's Jose Mourinho concurred with. Mourinho added to the pressure himself by saying that if Cole did not sign he had other options that he would quickly pursue.

Last night Mourinho said: "We haven't lost patience. Ashley Cole is an Arsenal player and they have the power in their hands to say 'yes or no' and we have the power in our hands to say how far is our offer.

"Our offer went to the limit. The club will not move ahead one single pound and I agree completely because our offer is an excellent offer for, of course, an excellent player. But it is in their hands and they say no." The developments will only fuel the considerable anger felt by Cole and his camp at the stance taken by Dein, who has led negotiations. Dein is being blamed by them for the hold-up even though sources believe that it remains only a matter of time before a deal is agreed. They pointed to the key phrase of "in the current circumstances" at the end of Chelsea's statement.

Dein is also embroiled in sorting out the future of Jose Antonio Reyes who is desperate to join Real Madrid with the signs last night that a deal was close. Real's sporting director Predrag Mijatovic is understood to have flown to London yesterday to seek talks with Dein after Reyes, at his own behest, was left out of Tuesday's first leg match against Dinamo so that he was not cup-tied. The Spanish club is keen to push through the transfer, but have currently bid below the £14m Arsenal hope to secure for the 22-year-old.

Reyes, who has not settled in England since his move from Seville in 2004 for £9m, was once again quoted in Spanish newspapers yesterday about his desire to join Real "as soon as possible". "Me and my family are somewhat tense at the moment and want to make sure things don't collapse, " Reyes told AS. "I want things sorted out as soon as possible."

The prospective deals for Reyes and Cole are crucial to Arsenal, but at the prices they want. They will soon move into the transfer market themselves with Marseilles' Franck Ribery hoping that he now heads the list of replacements for Reyes. Arsenal have inquired about the French international ­ although Lyon last night bid ¤22m for the winger ­ but also retain an interest in West Ham United's Yossi Benayoun.

Inevitably the transfer issues have over-shadowed Arsenal's achievements in Zagreb where with a young and under-prepared team they swept away the Croatian champions to all but seal their involvement in the lucrative group stages of the Champions' League.

In his 100th appearance Cesc Fabregas scored twice and the teenager said afterwards that he hoped that his countryman Reyes would stay.