Manchester United face competition from Chelsea for Gremio starlet Douglas Costa.

United are willing to pay an initial fee of £8m for the 18-year-old including various add-ons depending on his success at Old Trafford, but the deal looked to have faltered when Gremio opened talks by demanding £21m.

The Premier League champions have made it clear they consider that to be exorbitant but, after several weeks of negotiations, Gremio have now relaxed their stance and the two clubs are attempting to reach a compromise for the latest player to be tagged in Brazil as "the new Ronaldinho", says the Guardian.

An already complex series of negotiations has been further complicated by Chelsea's interest while Real Madrid have also been asked to be kept informed and Villarreal have submitted a bid of £6m plus add-ons. Manchester City had also shown tentative interest but have not followed that up with anything more substantial.