Chelsea were today left licking their wounds after losing out on Brazilian Robinho in the biggest transfer in British football history.

Chief executive Peter Kenyon had confidently predicted last week that Robinho would join the club before the close of the transfer window last night. But an amazing day of activity ended in dramatic style as the Real Madrid striker moved to Manchester City for £32.5million just before midnight.

Chelsea officials insisted this morning that their failure to capture their No1 transfer target was only because they refused to pay over the odds for the player.

A club spokesman said: "We were unable to agree terms with the club as we were not going to pay the 40m euro asking price."

Robinho had pleaded with Real to let him move to Chelsea on Sunday, yet the offer of a £94,000-a-week four-year contract after tax appears to have been enough to change his allegiance.

Real president Ramon Calderon, who had already criticised Chelsea for their handling of the affair, was in no doubt why the striker chose City. He said today: "The fact that he [Robinho] has accepted an offer from Manchester City says that he is not going for sporting reasons."

Ironically, the 24-year-old's first match for City will be against Chelsea at Eastlands on 13 September, a clash that was already eagerly anticipated following the sale of Shaun Wright-Phillips. The previous highest transfer was set by Chelsea, who spent £30.8m to sign Andriy Shevchenko from AC Milan in 2006 - only to resell him to the Italians this summer at a massive loss.

Manchester City manager Mark Hughes has now warned Chelsea and another of his old clubs Manchester United that City are ready to take their places as the country's big spenders.

Hughes had already tried to hijack Dimitar Berbatov's move to United following their takeover by the Abu Dhabi United Group. Berbatov did eventually join the champions for £30.75m but the transfer was eclipsed by the deal for Robinho.

Hughes has huge financial backing from the new owners who bought out Thaksin Shinawatra yesterday, and insists Robinho's arrival is just the start of the club's ambitions.

The City manager said: "Other big clubs wanted Robinho and this is a huge statement of intent. People understand now that we have the financial power to compete for any player in the world. We will try to emphasise to people that we are a club going places and maybe they'd like to be a part of it."

Earlier, City had a £34m offer for Berbatov accepted by Spurs, only to concentrate on Robinho once it was clear the Bulgarian was determined to go to Old Trafford. United manager Sir Alex Ferguson insisted he has made the signing of the summer after buying Berbatov just minutes before the transfer window closed.

Spurs caved into Berbatov's demands to move to Old Trafford and accepted 20-year-old striker Frazier Campbell on a season-long loan in exchange.

They also dropped their complaint to the Premier League over United's pursuit of the 27-year-old, with the champions agreeing to increase their offer from £28m to over £30m - £3m less than what Tottenham could have received from City.

Ferguson said: "This is a key signing. Dimitar is one of the best and most exciting strikers in world football. His style and ability will give the team a different dimension." Berbatov added: "Joining Manchester United is a dream come true for me. I look forward to playing my part in helping this club win more honours."

Tottenham's capture of Manchester City defender Vedran Corluka was their only permanent transfer on the final day having already secured striker Roman Pavlyuchenko at the weekend

A fee of £20m was agreed for Zenit St Petersburg forward Andrei Arshavin only for the deal to fall through over how the sum would be paid.