This summer, AC Milan have spent big, but they need to start recouping some of the investment, it must be said.
Spending €150 million in Italy is a rarity. Indeed, there needs to be some sort of sacrifice made for it to happen. However, Milan have not done that and yet have spent such a sum. In other words, they’re a complete anomaly currently.
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It isn’t always going to be like this, though, and they will need to make a few sales to start balancing the books.
How to hedge the investment
As Gazzetta dello Sport writes, the investment of €150m can be hedged with a few outgoings. After all, sales are the only option.
Rafael Leao, Fikayo Tomori and Youssouf Fofana being sold would actually bring them to a ‘positive’ in terms of capital gains, with a combined sale price of around €65-70m.
Besides that, the Rossoneri sit on a positive valuation of around €200m currently, so the accounts say that this spending can be absorbed, even if it isn’t ideal. A Champions League return this season will be a must, but especially after this spending.
If not, player trading would have to be the answer next summer. For now, though, things are beyond salvagable.
Bonuses of Reijnders, Tonali, and Liberali sale covers whole cost of Ramos for one year in tearms of ammortisation fee plus gross salary.
Bennacer and Origi departure means Milan could bring new guy for 50+ million
That’s how.
You forgot the sales of Morata, Colombo, Jimenez and Pobega all hit during this Summer. Plus the Tonali and Reijnder amounts, that’s around 65M Euro that can be used on the mercato.
Because purchases are accounted for over the entire length of player contracts that’s a 5 times multiplier for allowable spending.
TL:DR – Milan can spend up to 300M to buy players (they’ve already spent 150 or so for Ramos, Gila, Diawara and Moreira), without selling anyone. Any sales for net profit (plus Salaries saved) will just increase the war chest.
The only reason Milan need to sell right now is to get rid of players not in the project.
Because it won’t count as a 150M spend, it’ll count as their costs on this year’s books.
Basically, we lost Fullkrug’s wage from last year and have added 24M per year for Ramos, 13M per year for Gila and now ~14M for Moreira. And that’s excluding bonuses for their deals which we’ll incur next year or any agent fees/costs that get paid, so that probably adds another 10M to this year too.
OK, now we’re looking at a 50-60M increase in the budget for this year.
So instead of looking at the 150M number, the question is how to cover that increase both this year and in future.
If we look at likely sale candidates, we’re trying to see what annual cost we can free up. Firstly we can save on wages, if we loan players out and those wages are covered, or we can try to sell for a gain.
Gimenez:
– 12M annual cost
– 20M sale needed to break even (anything below that is a loss, anything above is a gain)
– At best, we’ll maybe save 5M on his wages if he moves on an unpaid loan – what we’re trying to do is offload the 12M in future seasons.
Fofana
– 13M annual cost
– 13M to break even
– He would be a good pick up for an EPL club but will only fetch a modest profit, but selling him would effectively be a direct replacement with Gila’s costs on the books.
Estupinan
– 9M annual cost
– 14M to break even
– Very unlikely he’ll be sold on. A loan covering his salary and amortisation is probably the most we’d get this year.
Tomori
– 13M annual cost
– 5M to break even
– Not massive savings to make for future years but a way to make a small income for this season’s accounts
Ricci
– 11.5M annual cost
– 17M to break even
Nkunku
– 20M annual cost
– 32M to break even
– This, more than fit, is probably the big motivation to sell Nkunku. If we can sell at a break even or loan him with a fee that covers this season, then we would be a third of the way to covering that 60M. Seems unlikely we’ll escape without a loss though; the two rumoured interested clubs don’t have anyone earning as much as he does with us
Leao
– 14M annual cost
– 11M to break even
– Leao’s wage is costly but he won’t save much per year. What he does represent is capital gains. Selling for something like 35M will save 14M per year but also net a healthy 20-25M to cover some of this year’s costs.
I could write you a proper article on this if you want? But you need to look at annual costs rather than the 150M transfer fees.
As the poster above mentions, we’ve also removed Origi and Bennacer’s wages. Bennacer we’ve almost certainly paid up most of the contract on though, so that’s not much gain. Origi was on around 6M gross I believe, so that’s another source of funding.
However, we have also extended Camarda and Comotto, which I guess will add 1-2M gross to the accounts also.
Actually impressed by how well you understand the football economics. Thanks for this explanation! Did not know it works like this.
There are some incomings that I hadn’t factored in either; 10M for Tonali and 14M for Reijnders
So that 24M will offset a chunk of the extra money on this season, although obviously we can’t rely on that in future years but does lessen the need.
Then again, we’re probably running at a loss at the moment anyway, with no European football at all last year, but I’ve no idea what that hole looks like.
The club also gets a lot of money for cooperations of cause. Milan does not need to break even with players bought and sells to make profit but hype this is the main part
Appreciate the explaining. Would be very nice if you could do some articles regarding economics. Many of us do not understand this.
Yep, this is turning into a kind of Yonghong Li summer 2.0, as a reset for Amorim. It probably means a couple of things: 1. It’s not going to happen again any time soon; 2. Unless we’re in the relegation zone, Amorim is not going anywhere for a while (also because of reason 1); 3. Qualifying for the CL is going to become paramount this season.
Reason 3 is the concern. It puts a lot of pressure on the coach and the squad, during a rebuild summer, to achieve top 4 against clubs that have better and/or more settled squads, and/or better/more proven coaches. Inter is clearly the favorite to get their 22nd scudetto. Then I think Como will finish 2nd (yes, you heard it here first folks). Then I think 3rd and 4th are Napoli and Roma in some order. That leaves us in the mix for 5th and 6th (Europa League) against Juventus and Atalanta. We’ll have to have an almost perfect season, relatively speaking, after massive turnover and a new coach to make it into the top 4. It’s possible, but I think the expectation may have been set a little too high right out of the gate.
Perhaps we should have just gotten Ramos, a DM and a CB and then trusted our youth on the wings and midfield (Batresaghi, Athekame, Comotto, Cisse, etc.) to develop for a year and not placed an expectation on finishing top 4 for this first season under Amorim before making a couple of targeted big signings in 2027 for the actual push for top 4 or the title. But again, only time will tell if we did well this summer.
In the end it all comes down to staying below the 70% mark for squad cost in relation to total revenues. For the 24/25 season I think we were at around 45% if I dont remember it wrong (225 million in total squad costs on 495 million in revenues) so the club have alot of room to increase squad costs (player amortisation/depreciation and gross salaries + agent comissions).
Sadly, I think the revenues fell during 25/26 (havent seen the annual report for last year that ended june 30th yet) but i have heard about projections saying a drop in revenues of 60-90 mil and squad costs going up to 245 mil. So lets say 245 mil in total squad costs vs 435 mil in revenues, thats still “just” 56%. So still room up to 70%.
There is an article on goal.com that explains how the recent spending is possible in broader terms that might interest people:
https://www.goal.com/en/lists/ac-milan-eur150-million-on-the-transfer-market-without-the-champions-league-how-cardinale-did-it-the-impact-on-the-accounts-and-the-future-strategy/bltdded2494653ad31d