The Brazilian club have long been linked with a move for the 29-year-old, who has one year remaining on his current deal with Milan.
However, it appears that the two sides are still some way apart in terms of their valuation of the Brazilian attacker.
"In this moment there is an important distance to complete the negotiation," Alvaro de Oliveira told Globo Esporte.
"Milan are asking a lot and the player too has a salary request which does not seem right to us.
"We have no intention of being foolish. We can talk only if Milan come back to reality."
Santos lost Neymar to Barcelona this summer.