Deco is close to agreeing personal terms with Chelsea but there is still a wrangle over the fee being demanded by Barcelona. The Spanish club want €20m (£16.7m) for the midfielder even though they have declared he can leave and the Portuguese international turns 31 in August.
Chelsea will not pay more than £10m and Deco's agent, Jorge Mendes, will have to continue negotiating with Barça to reduce the fee for the Brazlian-born player who Luiz Felipe Scolari is keen to make his first signing at Stamford Bridge.
Chelsea's hopes of signing Kaka – always slim despite indicating they will pay whatever it takes to secure the Brazilian international – have received a blow. The 26-year-old told the Brazilian TV channel SporTv that he "appreciated" Chelsea's interest, but said: "Thank you, but I don't have any desire to leave Milan." However, he added the interesting caveat that he would leave if the club wanted to sell him.
Steve Sidwell, meanwhile, has moved a step closer to leaving Chelsea. The 25-year-old midfielder is to hold talks with Aston Villa after a fee of £5.5m was agreed with Chelsea. The only potential stumbling block is persuading Sidwell, who has attracted inquiries from eight other clubs, to take a significant reduction in his wages.
He joined on a free transfer from Reading only last summer and is paid around £55,000-a-week but made just eight league starts last season. Villa are prepared to pay Sidwell around £35,000-a-week and are confident that he will accept their offer.
Sidwell, if he signs for Villa, will be regarded as a replacement for Gareth Barry although manager Martin O'Neill's interest in signing the player is long-standing and, at one time, he hoped to pair him with the England international.
However, it is inevitable that Barry will eventually join Liverpool although Villa are holding out for more than the £13m on offer. It's understood that O'Neill hopes to follow-up Sidwell's signing with a bid for the Valencia right-back Miguel although he is reluctant to meet his £11m valuation .
Both Miguel and Deco are in the Portugal squad for Euro 2008 and the latter has held talks with Internazionale, now coached byJose Mourinho who, like Scolari, is Mendes' client.
However, the Italians are also reluctant to pay the fee demanded by Barça and have also set their sights, firstly, on trying to land Chelsea's Frank Lampard.
The England midfielder, who turns 30 tomorrow, has one year left on his contract and will open negotiations over a new deal when he returns from holiday in the next few days. He is asking for pay parity with the club's highest earner, John Terry, who earns £135,000-a-week although Chelsea are reluctant to pay that amount. This week the Inter pres-ident, Massimo Moratti, declared Lampard as their "number one objective" in the transfer market.