Chelsea fear that they have missed out on Carlo Ancelotti’s first-choice transfer target this summer, with Franck Ribéry set to join Real Madrid for more than £40 million.

Ancelotti, who is expected to be confirmed as Chelsea’s new manager next week, disclosed in his autobiography this week that he had pinpointed the Bayern Munich forward as an ideal player for the London club as long as a year ago, when he first held discussions with Roman Abramovich about working at Stamford Bridge.

Signing the France international was a priority for Ancelotti, whose fate at his present club, AC Milan, will be decided after the final Serie A game of the season this weekend, away to Fiorentina. The Italian believes that Ribéry could bring some of the flair that Abramovich, the Chelsea owner, craves, but Real are bidding highest for the player.

Bayern were originally demanding £50 million for Ribéry, which would break the world record transfer fee of £45.6 million, which Real paid Juventus for Zinédine Zidane in 2001, but the Spanish club are hopeful of concluding the deal for less.

Chelsea are willing to invest this summer to help Ancelotti to reshape the side, but have balked at spending more than £40 million on a player they could have signed for less than half that figure two years ago. Then, the club were offered the option to sign Ribéry when he left Marseilles for Bayern, but instead they chose to move for Florent Malouda, his France team-mate, who has proved a disappointing acquisition.

With Ribéry destined for Madrid, Chelsea have already begun looking elsewhere in an attempt to inject some pace and width into a squad that has often appeared one-dimensional this season. Ashley Young, the Aston Villa winger, has been mentioned in dispatches, but Chelsea fear he will be overpriced and are reluctant to pay more than £20 million for a 23-year-old who has yet to deliver consistently on his undoubted promise. Villa are well placed to drive a hard bargain, as they did last year when they succeeded in keeping Gareth Barry despite an £18 million bid from Liverpool.

A more likely recruit for Chelsea is Yuri Zhirkov, the Russia international, who has been recommended by Guus Hiddink, the interim manager. The CSKA Moscow player is by no means a direct alternative to Ribéry, but he is valued for his versatility and although a competent left back, Chelsea view him as a left winger who will put pressure on the inconsistent Malouda.

In addition to wide players, Chelsea are eager to sign another striker, with Sergio Agüero, of Atlético Madrid, Karim Benzema, of Lyons, and Carlos Tévez top of their shortlist. Much depends on the future of Didier Drogba, which will not be decided until Ancelotti’s appointment is confirmed.

Real’s eagerness to sign Ribéry should put an end to their pursuit of Cristiano Ronaldo for another season as they are not in a position to spend the best part of £100 million on two wide players, particularly while Arjen Robben remains at the club.

Ronaldo refused to answer any questions on his future after Manchester United’s defeat by Barcelona in the Champions League final on Wednesday, but the indications are that he will remain at Old Trafford for at least another 12 months.

Real could also beat Chelsea to the signature of Xabi Alonso, the Liverpool midfield player, whom Ancelotti has also disclosed he would like to sign as Liverpool look to raise money to fund a renewed bid for Barry.