Chelsea refuse to give up as Real agree £55m Kaka deal

But Perez is poised to beat Abramovich in race to secure brilliant Brazilian's signature

Chelsea looked on the verge of losing their battle to sign Kaka last night when Milan and Real Madrid agreed a £55m deal to take the Brazilian striker to Spain.

Rumours of a final-hour increased offer from the Chelsea owner Roman Abramovich and the suggestion that Milan club president and Italian prime minister Silvio Berlusconi did not want the transfer announced until next week appeared to postpone the closing of the deal, but Real remain confident of presenting the player early next week.

After negotiations at new president Florentino Perez's business headquarters in the Spanish capital yesterday, Real agreed a fee with the Milan vice-president, Adriano Galliani. A five-year contract worth £7.7million a season, with the club taking 50 per cent of the player's image rights, was also agreed with Kaka's father, Bosco Leite, although it was Leite who is understood to have blocked the rubber-stamping of the deal.

It was suggested a last-minute, increased offer from Abramovich had turned the head of Kaka's father, who was also understood to be arguing over his own commission from the transfer. Milan sources claimed the transfer had indeed been done behind closed doors, but that Berlusconi had asked for the announcement to be delayed until after the weekend's European elections.

Earlier, Perez had said: "We started working today and we will lay the foundations to create a magnificent team. Kaka could be one of our objectives but the prices the media are talking about are really out of the reality. Some things can last for days, others for months. We have time until 31 August."

Kaka is understood to prefer the switch to La Liga despite former Milan coach Carlo Ancelotti's appointment at Chelsea this week and if, as Real expect, the player arrives in Spain on Monday to be presented to their supporters, it will scupper what Abramovich had seen as a personal gift to his incoming Italian manager.

Chelsea's hierarchy had made moves to set up a face-to-face meeting between Kaka and Abramovich to persuade the Brazilian that a £60m transfer to Stamford Bridge would be a better option for him than Real.

As reported in The Independent yesterday, Kaka is the first choice among the big names that Chelsea want to bring to the club this summer. The player would command wages of around £150,000-a-week which would break the Stamford Bridge wage structure, however Abramovich and his aide and club director Eugene Tenenbaum are confident that they would have the backing of John Terry and Frank Lampard. Both players are top of that scale on £135,000 a week but any move by the pair to renegotiate new deals in the event of Kaka arriving at the club would be discouraged.

Abramovich spends much of his summer on his yacht Pelorus in the Mediterranean and it is a favourite tactic of his to invite friends, Chelsea players and other football people to join him on board. After Milan's meeting with Real, it would not be a great breach of protocol for Abramovich to meet the 27-year-old.

Despite his reported losses during the economic downturn of anything between £3bn and £5bn, Abramovich will back Ancelotti this summer with at least one major signing – the priority being Kaka.