City close in on Balotelli after Inter drop £28m asking price

Manchester City were closing in on a deal to sign the Italian striker Mario Balotelli last night, with a £2.8m net salary agreed and Internazionale finally ready to drop their asking price to the £23m price City are offering.

But manager Roberto Mancini's attempt to conclude his business in time for the Premier League start at Tottenham on Saturday is by no means going entirely to plan. City's efforts to tie up the deal for James Milner which presaged Martin O'Neill's departure from Aston Villa on Monday were being held up last night by the demands for a £2m exit payment from the makeweight Stephen Ireland, which are threatening to scupper the entire deal.

A fee and personal terms have been agreed with Milner, who had been expected at Carrington for a medical yesterday. But since the player-plus-cash arrangement which would bring the midfielder to City for a total value of £26m is the only deal on the table, the deal may drag into next week unless Ireland – who carries some grievance about the way City have dispensed with him 12 months after he was named player of the season – gives way.

A four-year deal for the 19-year-old Balotelli is virtually in place, though, with Inter now looking to raise money to finance the acquisition of Liverpool's Javier Mascherano. Sources in Italy indicated that there had even been a tentative plan to fly Balotelli to Manchester by private jet yesterday and that the deal was about to be signed off. With the salary of €7m (£5.76m) after tax agreed – taking Balotelli close to the initial demands which City had balked at – Mancini's determination to drive through a deal is understood to be based on his belief that the player's youthfulness is accompanied by an utter fearlessness.

Mancini has never forgotten how, as Inter manager, he gave him his debut at a key stage of the club's season in December – at home to Cagliari in a match in which Hernan Crespo was controversially left on the bench. But the striker flourished and maintained his place in the side. Mancini believes this augurs well for the teenager's Premier League prospects. City and Inter were initially £4m apart on valuation – with Inter demanding €30m and Mancini's club ready to pay only €26m. But the club seem to have reached a compromise at €28m.

City have known throughout the course of a frustrating two-month pursuit of the 19-year-old that they might need to include some brinkmanship in their negotiating strategy and, after days of resistance, there were the first signs of genuine movement from the selling club yesterday as the start of the new season looms. Benitez is desperate to sign Mascherano for the new season and the Argentine is equally desperate to be away from Anfield.

On a fast-moving day at City, Robinho returned punctually from the Brazil camp and joined afternoon training, in line with a schedule agreed between player, club and the Brazilian football federation. But there have now been two serious bids from the Continent for a player City want to sell, rather than face the embarrassment of leaving him out of their 25-man squad for the Premier League season. Though the player's representatives were pushing his case to Barcelona, there has been no positive response from that direction.

City are willing to sell at a loss on their £32.5m investment – a British transfer record – and the two new bids are certainly more realistic than the speculative offers from the Istanbul side Besiktas, German side Schalke and an unnamed Russian club, which were tabled earlier this summer.

Another player definitely on the way out of the club is Felipe Caicedo, a remnant of the distant Sven Goran Eriksson era, out on a season-long loan at West Ham, and though Craig Bellamy also returned to the club after international duty, he seems to be on the way out, possibly to Celtic, whose manager, Neil Lennon, confirmed his club had made an approach.

Though Sunderland manager Steve Bruce suggested yesterday that Tottenham had also made inquiries about Bellamy, it is understood that they have not, with City keen to avoid handing the player to a potential rival for a top-four spot. Ideally, the club would prefer not to sell him to any other Premier League side, though Mark Hughes' Fulham are expected to join the pursuit.

City have moved to clear up uncertainty about the omission of both David Silva and Jo from their Europa League squad. Both players were included, the club said, though omitted from the list Uefa published on Wednesday ahead of the two-legged qualifier against Timisoara. Both have now been reinstated, though Bellamy remains out of the squad.

City's likely 25-man squad

Goalkeepers

Shay Given (HG), Joe Hart (HG), Stuart Taylor (HG)

Defenders

Wayne Bridge (HG), Jerome Boateng (F), Aleksandr Kolarov (F), Kolo Toure (F), Micah Richards (HG), Joleon Lescott (HG), Pablo Zabaleta (F), Dedryck Boyata (F)

Midfielders

Vincent Kompany (F), Gareth Barry (HG); Yaya Toure (F), Patrick Vieira (F), Adam Johnson (HG), David Silva (F), Nigel de Jong (F), James Milner (HG), Shaun Wright-Phillips (HG)

Forwards

Carlos Tevez (F), Emmanuel Adebayor (F), Mario Balotelli (F), Roque Santa Cruz (F), Jo (F)

Likely to leave

Felipe Caicedo (F), Robinho (F), Michael Johnson (HG), David Gonzalez (F), Stephen Ireland (HG), Craig Bellamy (HG), Kelvin Etuhu (HG)

Key: F: foreign player. HG: Players who qualify as home-grown under the new rules. There must be at least eight in the squad