MANCHESTER UNITED have re-established formal contact with the Brazilian club Gremio about trying to reach a compromise over a fee for Douglas Costa, the talented 18-year-old, who has been hailed as the new Ronaldinho in his country.

Alex Ferguson rates Costa as the brightest young talent currently playing in South America, but could not convince Gremio to allow him out on loan when negotiations began earlier this summer and believe the deal can happen only if the Gremio drastically lower their valuation.

The Porto Alegre club have severe financial issues and have informed prospective buyers they want €25 million. United regard that as excessive for a player who has not yet played 20 senior games, but they are hoping Gremio’s position is negotiable and have put together a financial package, with an initial outlay of €8 million.

The transfer hinges on whether a compromise can be agreed and United are hoping the influential deal-maker Chris Nathaniel can help to convince Gremio that they risk getting nothing if they continue to play hard-ball.

Nathaniel is prominently involved with Costa and has spent the last few days in Brazil holding extensive talks with Gremio’s hierarchy.

Manchester City are also aware of Costa’s burgeoning reputation but they, too, regard Gremio’s demands as exorbitant.

United’s policy is different, targeting players below the age of 25 if large sums are involved, and Costa fits into their transfer strategy as a young player whose value should go up in future years, just as happened with Cristiano Ronaldo, who was 18 when he signed from Sporting Lisbon.

Costa, a Brazil under-20 international, has admirers in Spain and Italy but has indicated he would like to move to England and become United’s fourth signing of the summer, following Antonio Valencia, Michael Owen and Gabriel Obertan to Old Trafford.

Carlos Alberto, Brazil’s outspoken 1970 World Cup-winning captain, recently accused United of “raping Brazilian football” and urged Fifa to intervene to prevent the country’s best young players from being lured away by Europe’s leading clubs.

United, however, are proud of their expansive operation in South America, having plucked three Brazilians – Rafael and Fabio da Silva plus Rodrigo Possebon – from relative obscurity.