Tottenham Hotspur still frustrated by failure to sign Joao Moutinho

Porto's Joao Moutinho shows his frustration during a match; Tottenham Hotspur are frustrated he is not their player.

André Villas-Boas's frustration at Tottenham Hotspur's failure to sign Joao Moutinho from Porto on transfer deadline day was compounded by the knowledge that the clubs had submitted an agreed deal sheet to the Premier League before the 11pm cut-off.

Villas-Boas had made the Portugal midfielder his priority target, considering him to be the player not only to replace Luka Modric, who was sold to Real Madrid for £30m, but to knit together the 4-3-3 formation that he has introduced at White Hart Lane. Moutinho is well schooled in the system and he played in it under Villas-Boas at Porto.

The Tottenham manager's hopes that the transfer would be completed were raised last Friday when his club and Porto signed the deal sheet and submitted it to the Premier League. The sheet, which is an emergency mechanism for late transfers, cannot be used before 9pm and must be with the League by 11pm.

It allows a club to confirm that an agreement is in place with regard to the fee and the structure of the payments in order to allow for additional time to submit the remaining documents, including the player contract. Once the sheet arrives, the clubs can have until 1am to submit the full paperwork but, in the case of an international transfer, such as this one, the final deadline for everything to be fed into Fifa's transfer matching system is midnight.

Tottenham's offer was €25m (£20m), which would have been a club record, eclipsing the £16.6m that they paid to Dynamo Zagreb for Modric in 2008, and they and Porto continued to work on the deal between 11pm and 12 midnight. It is understood that Moutinho wanted the move but his third party ownership presented one issue that could not be resolved before midnight.

A third party investor owns 15% of Moutinho's economic rights, after deals were struck following the player's €10m transfer from Sporting Lisbon to Porto in 2010. Although Porto paid for 100% of Moutinho's rights, they sold 37.5% of them in October of that year to the investor for €4.2m before, in August 2011, buying back 22.5% of them.

The investor's 15% entitled him to a cut of the fee and, under Premier League rules, which forbid third party ownership, he had to be bought out at the Porto end before the deal could be ratified. In the frantic moments before midnight, the clubs could not reach agreement, with sources close to Tottenham saying that Porto went back on the previously signed deal sheet to demand a higher fee.

Another of the complications regarded Moutinho's personal terms and, when his demand for a bigger salary was met, Porto used the notion that Tottenham valued him more highly to drive up the fee. Porto already stood to pay Sporting Lisbon a 25% cut of sale profits above €10m, the figure that Sporting had parted with two years ago.

The third party ownership issue resonated further on Tuesday, when Porto confirmed the €40m sale of the striker Hulk to Zenit St Petersburg; the Russian champions have also signed the midfielder Axel Witsel from Benfica for the same price. The Russian transfer window has a later closing date than that in England.

Fifteen per cent of Hulk's economic rights are owned by a third party investor and Porto said, in a filing to the Portuguese stock exchange, that they would receive the fee from Zenit in exchange for the 85% that they held in the player; in other words, Hulk remains under the influence of his third party owner, which is not against the rules in Russia.

Chelsea, though, would appear rueful onlookers, having held an interest in Hulk and agreed a fee of £38m for him in principle with Porto earlier in the summer. The deal, though, foundered over complications related to the buy-out of his third party owner.