We'll have last laugh after being ridiculed over Kaka

Manchester City are accustomed to living in the shadow of their neighbours and even now, when they are ostensibly the richest club in the world, they fear they will be unable to compete in the "A" list transfer market against United and the other powerhouses of European football.

City's manager, Mark Hughes, is irritated their offer for Kaka during the January window was ridiculed, while Real Madrid's successful pursuit of the Brazilian is justified as sound business on the part of Real.

But Hughes acknowledges that City do not yet have the allure of Madrid and admits the fees United and Milan are receiving for Cristiano Ronaldo and Kaka will further restrict their recruiting options.

City's wealth is proving a double-edged sword. They were prepared to pay considerably more than the £56m spent by Madrid to sign Kaka and gave Aston Villa £12m for Gareth Barry, a player who had only one year left on his contract.

Hughes said: "The Madrid president gave economic reasons to justify the amount spent on Kaka and they were the same arguments we put forward, but no one was particularly interested in listening to us. We had a negative reaction. We were criticised for those reasons. But if there's an opportunity to go to Real or Man City, at the moment the choice of many of the top players would be Real before Man City.

"I didn't know the Ronaldo deal was happening, but although I'm sure we could have made a case to compete, there was only one place he was going to leave Man United for and that's the club he's going to.

"Two of the other big players have a lot of money at the moment. United, with £80m for Ronaldo on top of the resources they already have, gives them a significant amount. Milan have banked a lot of money from the Kaka deal.

"They are European clubs with a lot of history and significant funds to go into the transfer market. They may be in the market for players we're after, but it won't stop us trying to get the quality we need."

Carlos Tevez is a player of the calibre Hughes craves, but United now have the financial muscle to resist City's challenge if they wish to keep the Argentinian at Old Trafford on a permanent contract. Hughes said: "I admire Tevez as a player and I like the way he approaches the game. You'll have to ask United what they feel about the players they have and the ones they want to acquire.

"We'll try to get marquee players if we can, but players we think we can realistically bring [here]. If we're not able to get those, we don't want to sign players for the sake of it."

Hughes is confident he can still sell the City dream to players. Tevez, Everton's Joleon Lescott and Ports-mouth's Glen Johnson and Peter Crouch are all possible targets.

"What we've got to do is offer those players something different," Hughes said. "We can't at the moment offer Champions' League football and that is a big thing for top players. We're not at the level of some clubs and we accept that.

"But we can offer a different challenge, a different goal. We put it to them, 'if you come to Man City you'll be at the beginning of a journey that we feel will lead to something very special and successful. If you see it through to its conclusion you'll make your mark on the game'. Every Premier League footballer is a wealthy man, but the vast majority won't make their mark in the game. You get to a point where you've earned a significant amount of money but here you can make an indelible mark on the game and that counts."

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