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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.

Sir Alex Ferguson, the United manager, rates Costa as the brightest young talent currently playing in South America but the Premier League champions 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 Porto Alegre club drastically lower their valuation.

Gremio have severe financial issues and are acutely aware that selling their most prized young asset could be the answer to those problems. With that in mind, they have informed prospective buyers they want £21m. 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 £7m, plus a series of success-related add-ons if the player lives up to the promise that has brought him to the attention of Ferguson via John Calvert-Toulmin, the club’s principal scout in Brazil.

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 at all if they continue to play hardball. Nathaniel, whose extensive list of clients includes Rio Ferdinand and Robinho, is prominently involved with Costa and has spent the last few days in Brazil, in the process holding extensive talks with Gremio’s hierarchy.

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Manchester City are also aware of Costa’s burgeoning reputation but they, too, regard Gremio’s demands as exorbitant and would rather pay significant transfer fees for established players. 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, talented footballer whose value should feasibly 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 other admirers in Spain and Italy but has indicated he would like to move to England and become United’s fourth signing of their summer, following Luis Antonio Valencia, Michael Owen and Gabriel Obertan to Old Trafford.

Carlos Alberto, Brazil’s outspoken World Cup-winning captain in 1970, 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 Brazilian players – Rafael and Fabio da Silva plus Rodrigo Possebon – from relative obscurity in the past two years.

Costa, who joined Gremio at the age of 11 and is contracted to the club until February 2013, helped Brazil to victory in the South American Youth Championship in January and February, scoring three goals in the process, but United’s interest in the player dates back more than a year before that. Gremio is the club where Ronaldinho made his breakthrough and Costa has obvious similarities in terms of his ability to run with the ball and beat opponents from his favoured role between midfield and attack, as well as being a free-kick specialist.

Any deal would be dependent on the player receiving a work permit but United have never had significant problems obtaining the necessary paperwork in the past.