Daniel Levy emerged victorious in one of the battles of the summer when he refused to countenance the sale of Luka Modric to Chelsea, despite the star midfielder making it plain that he wanted the move. It is fair to say the Tottenham Hotspur chairman's success prompted surprise.

He has previous when it comes to buckling in the face of eye-watering offers – think of Manchester United prising first Michael Carrick and then Dimitar Berbatov from White Hart Lane for £18.6m and £30.75m respectively, and Chelsea were prepared to pay £40m for Modric. Player power regularly holds sway in these matters and most of the Tottenham dressing room fully expected the Croat to appear in Chelsea colours after the closure of the transfer window.

Levy's stance represented a statement of intent and, on one level, it was pleasantly received by the players. Maybe there is something afoot here, they mused. For Levy, though, it has heralded the beginning of a war and it is one that stands to define the future direction of the club.

Modric, who is under contract until 2016, might have been made to stay but he wants to do so on his terms and they involve a pay rise to £100,000-a-week and written assurances that if a big club came in for him again, he could at least talk to them. The thing that irked him over the summer was that there was no option to discuss Chelsea's proposal, even though he thought he had a gentleman's agreement with Levy regarding such scenarios.

The new contract talks between Modric's advisers and the club are described as "ongoing" and they have been for some weeks. For Levy, the situation is particularly delicate as he is aware that the eyes of the squad and their agents are fixed upon it. In many respects, it is a watershed moment.

Levy has managed to keep the weekly wage ceiling at the club bolted down to around £70,000, with some players topping up their pay with performance-related bonuses. Even Emmanuel Adebayor, the on-loan Manchester City striker, has been accommodated into the structure. He might earn £170,000-a-week but City are contributing £100,000-a-week for the duration of his season-long deal. As an aside, this feels like one of the most graphic examples of City's financial might/extravagance.

Tottenham's wage ceiling compares unfavourably with those at the Manchester clubs, Chelsea, Arsenal and Liverpool but if Modric were to power through it, it would not so much as lead to knocks at Levy's door as a stampede through it. Key personnel such as Ledley King, Michael Dawson, Gareth Bale and Rafael van der Vaart, prompted by their agents, would follow Modric in demanding rises.

They would not be the only ones. Less heralded players such as Benoît Assou-Ekotto who know they could earn more elsewhere and have demonstrated their wholehearted commitment, would want renegotiations. The full-back was chased by the nouveaux riches of Paris St-Germain in the summer but he has a love affair with London and, like many of the first XI, he believes that the club could be on the brink of a golden era, if there is adventurous leadership.

Assou-Ekotto did not travel to Wigan Athletic with the squad three weeks ago as he was suffering from illness but the manager Harry Redknapp called him the night before the game to ask how he was and wonder if he could yet feature. Assou-Ekotto took a taxi to Wigan at 7am and he played the 90 minutes in the 2-1 victory. There is the strong sense of attachment to the cause.

Harry Redknapp's future is also linked to the Modric situation. It is widely assumed that he will leave next summer to succeed Fabio Capello as the England manager but he might stay at the club if he could compete at the very top. Redknapp is mindful of the scope for serious personal abuse if he were to take charge of the national team. Were he able to offer the six-figure weekly wage packets to tempt the likes of Rio Ferdinand, for example, a player that he covets, he might yet have an agonising choice to make.

It was revealing to hear Redknapp's take on Modric v Levy. "You can't say he is worth £40m and want to pay him the wages of someone who is worth £5m," Redknapp said. "You have to look after the boy." The players loved that.

Levy is happy enough to make Modric the highest-paid player in the club's history but he is understandably wary about giving him possible escape clauses as well. The worst case for Levy is that he opens the floodgates and still sees Modric skip off in search of Champions League football. If he did nothing, discontentment would fester.

Levy's goal has always been to establish Tottenham as regulars in Europe's elite competition and he knows that the increased cash flow could sustain the club at the next level and also ensure that the ambitions of players like Modric were fulfilled in N17. The problem is that the financial speculation normally has to come first and the associated risks are clear.