AC Milan chief executive Adriano Galliani has insisted playmaker Kaka will not be joining Chelsea.
It is believed Kaka is close to a £56m move to Real Madrid but reports claimed the Blues, coached by ex-Milan boss Carlo Ancelotti, made a late £73m bid.
Chelsea said reports of such a move for the Brazilian were "totally untrue".
"An agreement with Chelsea could not exist. Kaka goes to Real or he remains at Milan," Galliani told Italian newspaper Gazetta dello Sport.
"Negotiations with Real do exist but an agreement is not done."
A statement from Chelsea read: "We've never made an offer to AC Milan for Kaka.
"As a consequence we have not discussed a salary with the player either. Any reports to the contrary are totally untrue."
Kaka, who joined Milan from Sao Paolo in September 2003, is reportedly poised for a five-year deal with Real for a salary worth £7m a year.
But Milan owner Silvio Berlusconi has still not sanctioned any move and plans to talk to Kaka on Monday before announcing a decision on the player's future.
However, Galliani insisted the deal makes financial sense for Milan.
"The reasons for the departure of Kaka are solely economic, Milan cannot go on losing 70m euros a year," he said.
Former Milan coach Ancelotti, 49, who officially takes over as Chelsea manager on 1 July, previously stated: "There is one player I would like to sign but I cannot take him with me."
Reports have also linked the Stamford Bridge outfit with two other Milan players - 19-year-old Brazilian Alexandre Pato and Italian midfielder Andrea Pirlo - but Galliani was adamant no more stars would be leaving the San Siro.
"We're not falling apart. The other big players are not for sale. Now a great attacker will arrive," he added.
FOOTBALL'S MOST EXPENSIVE DEALS
£46m: Zinedine Zidane - Juventus to Real Madrid (2001)
£37m: Luis Figo - Barcelona to Real Madrid (2000)
£35.5m: Hernan Crespo - Parma to Lazio (2000)
£32.5m Robinho - Real Madrid to Man City (2008) £32.5m
£32m: Christian Vieri - Lazio to Inter Milan (1999)
"There is a negotiation for Kaka but none of our other key men are for sale. That includes Alexandre Pato, Andrea Pirlo and Clarence Seedorf."
AC Milan sold Andriy Shevchenko to Chelsea for about £30m in 2006 before the Ukraine striker returned to Italy two seasons later on loan and Berlusconi believes the current situation over Kaka is very similar.
"It is always our lads who decide where they want to play. Now we will see," he stated. "I can only say that we were very attached to Sheva.
"When an offer arrived that we could not equal, because I had a great friendship with him, I did all I could to convince him but in the end I left it up to him."
It had been claimed that Kaka's father and agent Bosco Leite had already sealed the transfer in Madrid, with Berlusconi conceding the player may move because "they have offered him so much money".
The proposed £56m fee would be a world record in pounds sterling but not euros because the exchange rate is different to when Zinedine Zidane moved to Real for £45.6m in 2001.
As well as the player's father, Galliani was also in Madrid, although the Italian club insisted that was because he had been invited to a dinner for the election of Perez as Real's new president.
"AC Milan and Real reckon they have the basis for a deal," Spanish football expert Sid Lowe told BBC Radio 5 Live. "But there are things in the way, like the commission to be paid to Kaka's father and with the European elections coming up on Thursday, Berlusconi will not want to lose him just now."
Earlier this year, Kaka rejected a £100m transfer and a reported wage offer of £500,000-a-week to go to Manchester City and in an interview on Tuesday he told Gazzetta dello Sport he wanted to stay at the Serie A club.
In January, Berlusconi admitted the scale of City's offer made it difficult for Milan to keep hold of the Brazilian.
Returning Real president Perez was previously in charge of the Spanish club from 2000 to 2006 - during the famous Galacticos era that resulted in the spending of large fees to bring the likes of Ronaldo, David Beckham, Luis Figo and Zidane to the club.
Perez's comeback is on the back of a pledge to relaunch another Galacticos era, with Kaka known to be one of his chief targets.
Kaka is currently with the Brazil squad ahead of their World Cup qualifier against Uruguay in Montevideo on Saturday.