Manchester City have lost out to Italian side AC Milan in the race to sign Barcelona playmaker Ronaldinho."AC Milan and Barcelona have reached an agreement in principle over the transfer of Ronaldinho," the Serie A club said on their website."The player will be in Milan on Wednesday to undergo a medical and sign a contract that will keep him at Milan until 30 June 2011."City had reportedly bid £25.5m for the 28-year-old Brazilian. Manchester City boss Mark Hughes believes they should be given credit for launching their bold move to bring the Brazil superstar to the Premier League.He said:I think we have shown a willingness to bring Ronaldinho here and should be complemented for that. In the end though it will be the players decision.Italian newspaper Gazzetta dello Sport reported on its website that Milan will pay Spanish side Barcelona just £14.6m for his services, with the figure likely to be increased by performance-related bonuses.Milan chief executive Adriano Galliani has been in Barcelona for talks with the club and the player for two days.The two-time Fifa World Player of the Year's time at Barcelona effectively came to an end in June when new manager Pep Guardiola announced the playmaker was surplus to requirements.Nevertheless, the Catalans were not prepared to release Ronaldinho to join Dunga's Brazil squad for next month's Beijing Olympics.City will be disappointed at their failure to pull off what would have been a major coup, despite the heavy financial and footballing risks involved in completing the deal.But their determined effort to sign Ronaldinho has offered a clear indication of the financial muscle available to new boss Hughes from owner Dr Thaksin Shinawatra. Reports suggest that Ronaldo's negotiating team were ultimately uinimpressed by a financial package from City that was heavily weighted with clauses relating to performance, success and marketing.City had also hoped their signing on Ronaldinho's fellow countryman Jo in a deal that could eventually be worth £19m would have been a signal of their intent and lured him to Eastlands, but he has decided to move to Milan.Ronaldinho helped Barcelona win back-to-back Spanish league titles (2004-05, 2005-06) and the Champions League in 2006, but failed to cement a regular place in the starting XI last season because of injury and fitness issues.Source: BBC