Vice-president Adriano Galliani admits the Italian giants are interested in signing the City striker - but not for the £31million he claims the Premier League champions are demanding.
Balotelli, who is a Milan fan, has long been linked with a return to Italy, where he progressed through the ranks at Inter Milan before joining City in 2010.
Galliani said: "At the end of Friday Manchester City was still saying 37 million euros. We'll see on Monday. At that price, Balotelli will stay at Manchester City."
Balotelli's agent, Mino Raiola, spent time at Milan's headquarters on Friday, reportedly discussing a possible move.
Galliani is more hopeful of bringing Milan idol Kaka back to San Siro and is in talks with the Real Madrid player about reducing his salary.
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