The Italian giants, after much speculation regarding an approach, have confirmed their interest in the fiery frontman.
Milan are, however, reluctant to pay the price currently being asked for and have informed City that they will have to compromise if a deal is to be done.
Milan vice-president Adriano Galliani hopes an agreement can be reached, with it possible that an instalment package could be put in place, helping to spread the cost.
"It all depends on Manchester City," he told Sky Italia.
"Should our request fail, we will move on. At the moment we will stay where we are. We must wait and see what happens.
"Could we play in instalments? It is possible if we can agree on a sum to be paid."
Asked for his opinion on the likelihood of a deal being put in place for Balotelli, Milan president Silvio Berlusconi told Skytg24:" Will he arrive? Honestly, I do not know."
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