Examining the financial impact of a renewal for Calhanoglu: Amortisation and three benefits

By Rohit Rajeev -

Hakan Calhanoglu was a man out of favour at the turn of the year, with a large section of fans calling for him to leave ahead of the January transfer window.

However, Milan underwent a revolution in their form post-Lockdown and Calhanoglu was the centre of it all, amassing seven goals and eight assists in 12 Serie A games after the season resumed.

If you’d have mentioned a contract renewal for the Turkey international back in June 2019, it might have seen as an attempt at humour by some fans, but fast forward to the present day it is seen as a very important gauge of the club’s aspirations.

Sky Italia (via MilanNews) reported on Wednesday that Calhanoglu has certain career objectives like playing in the Champions League as a protagonist, and there are teams interested in signing him as a free agent like Juventus and Atletico Madrid. He added that there is a big distance between offer and demand at present, too.

Milan are scheduled to sit down with his agent, Gordon Stripic, for contract negotiations soon, and Milan will be hoping to find a compromise at around €4m net per season, which is between the €3m apparently tabled and the €5m demanded.

Calhanoglu has a contract until June 2021, however as per the free agent rules he is allowed to speak to clubs in January 2021 and agree a pre-contract to join the club at no cost once the 2020-21 season is over.

Milan, will want to avoid any situation where the 26-year-old leaves on a Bosman without bringing any income to the coffers with which to find a replacement. Here, we take a look at the situation in depth…

Financial impact

Financially, a €4m net season net contract would have an affect of €8m per season on the balance sheet, as it is €4m plus the same amount in tax paid, which the club covers.

There has been the introduction of a growth decree in Italy whereby if a player is at a club for more than two years their taxes are essentially halved, which would make the gross value €6m per year.

Calhanoglu’s yearly amortisation (the rate at which his outstanding value on the books goes down) is €5.8m and he is down to the last year of his contract. His book value is close to €3.8m, so if Milan extend his contract by three years then his amortisation is further spread to just over €1.2m per year.

Benefits of a renewal

Milan are in a sense cornered in this situation, with all the cards in Hakan’s hands, but the player has apparently re-iterated his desire to stay and may accept a €4m per year net. That being said, the reasons to renew him at that figure are three fold…

1. If Calhanoglu continues his form and a big club comes calling and offer a good amount of money, Milan can collect a huge capital gain given his value on the books will be between €0-3.8m (see above calculation). This will help Milan re-invest in the market as well as have a positive impact on the balance sheet.

2. It reduces the amount of amortisation, clearing more space for investments in the future. As shown in the above workings, Calhanoglu’s amortisation reduces from €5.8m to €1.2m per year, which essentially frees the €4.6m difference in cash flow.

3. If Milan cannot make it to the Champions league this season, having a consistent performer like Calhanoglu to keep the core of the squad will be useful so that Maldini and co. can reinvest in more problematic areas like the right wing.

While Milan have saved a total of €34.2million in gross wages (calculate from Calcio e Finanza’s wage sheet above), Milan have added close to €16m to the wage bill with new signings.

With COVID-19 squeezing every penny of the club’s budget due to the big void of matchday revenue, it is good to see how Milan have added players without straining resources. The renewals look financially feasible as a result, and with the will of the players won’t be a thing of concern as long as the team are winning.

Tags AC Milan Hakan Calhanoglu


  1. Ciaran says:

    Amortization is a non cash item so cannot be converted to cash flow as mentioned.

  2. Perttu Junnonaho says:

    We must act real quickly to renew Hakan and Gigio, because they are crucial part of our team! We must not get overly cheap, in order to save every penny, because once we have those two crucial players resigned, hopefully without sell-clause”s, then we can relax, and even sell them for huge profit!

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