Costs, caps and the coach: What the summer tells us about Milan’s ambition | OneFootball

There is a debate raging at the moment regarding AC Milan’s ambitions and whether the new-found financial resurgence has been congruent with an intention to raise the level of the squad.

To start this piece we must quantify exactly what is meant by an improvement in the accounts. Calcio e Finanza reported, Milan registered a €6.1m profit in 2022-23 and they are expected to close 2023-24 with a profit between €10m and €20m as the key numbers continue to trend in the right direction.

The revenues are expected to be around €435-440m, an increase of over €30m compared to last season and including over €56m in revenue from the ‘management of players’ rights’. In essence, most of that is the €52m in capital gains, mainly relating to the sale of Sandro Tonali to Newcastle.

The new contracts with PUMA and Emirates – worth around €30m per season each – came into effect, while stadium revenues were slightly down after a premature elimination from the Champions League and the lack of a Scudetto battle. Overall, though, the outlook is very positive.

The 2024-25 outlook

One way of determining how much an ownership is willing to spend on the playing staff is through the squad cost for a given season. This is calculated by adding the amortisation of players’ transfer fees and their gross salaries, while players that are sold/leave can be subtracted from the figure.

We must once again thank Calcio e Finanza for the figures, the headline being this: Milan’s squad cost has increased €20m compared to the 2023-24 campaign (+12.9%), going from approximately €155.2m to €175.1m .

The main factor that weighed on this increase were the investments made by the club on the incoming market, with higher costs of approximately €50m euros, not sufficiently compensated by the lower costs (approximately €16m recouped, without considering capital gains and loan revenues).

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Compared to last season, Milan have seen 12 players leave when factoring in permanent transfers, expired contracts and players loaned out. Among those who have left the club permanently, the most significant in terms of impact on the budget are Mattia Caldara, Olivier Giroud and Simon Kjaer.

When factoring in the amortisation and the gross salary received, Caldara’s impact on the financial statements was over €9m, because it is easy to forget that he arrived for around €38m from Juventus as part of the deal that saw Leonardo Bonucci go the other way.

In addition, the Rossoneri saw two players leave permanently Daniel Maldini (to Monza, where he already played on loan last season) and Jan-Carlo Simic, who moved to Anderlecht. Added to these are all the loans, where Milan save money – at least for one season – on gross salary only.

On the transfer front, four players have arrived permanently: Strahinja Pavlovic (from RB Salzburg), Emerson Royal (from Tottenham), Youssouf Fofana (from Monaco) and Alvaro Morata (from Atletico Madrid). Roma striker Tammy Abraham join on loan.

One aspect that some fans might not consider is loan returns, with Fode Ballo-Tourè and Divock Origi the thorniest cases. The club have so far been unable to find a place for the full-back and the striker this summer with the Turkish market the last hope.

In terms of salaries (calculated using data emerging from reports and estimating the wages of the youngest players, for which no data is available), Rafael Leao leads the squad with his €5m net per season plus bonuses.

There are other caveats to consider here too, such as the fact that Morata costs the club more as he cannot benefit from the tax relief provided for by the Growth Decree, meaning his net salary is almost doubled.

Therefore, the incoming operations have inevitably impacted the cost of the Rossoneri squad and the departures of players on expiring deals in addition to the little money recouped from sales and loans have not compensated for this increase.

Despite the growth €20m from last season to this, the Rossoneri still remain behind Inter and Juventus in the squad cost rankings, two sides that – in head coach Paulo Fonseca’s words – should be title rivals.

The Nerazzurri are expected to pay out around €25m more for their squad in 2024-25, while the Bianconeri’s is €50m more after they had quite a lavish window of rebuilding under new coach Thiago Motta.

It must be stated that these are increased expenses that Milan were and are absolutely able to afford thanks to their excellent financial health. They are one of the few clubs in Serie A who don’t have to sell to buy, and that is something very positive, even if a healthy amount of player trading helps.

The Goldilocks Zone

For those not familiar with what the heading above means, the ‘Goldilocks Zone’ refers to finding a sweet spot whereby there is not too much or too little of something but just the right amount. In this case, we are talking about transfer fee expenditure.

Milan once again operated in a ‘sweet spot’ this summer in terms of the money spent per player, something that we have written at length about before and that has continued on from the Elliott Management era into the RedBird Capital tenure.

There is a good argument in favour of its success, for example the fact that it yielded the core that was in place for the Scudetto-winning campaign, with players like Mike Maignan, Fikayo Tomori (he was a bit more), Theo Hernandez, Ismael Bennacer and Sandro Tonali all arriving in the €15-25m range. Rafael Leao cost less than €30m too, until his fine repayment took it up towards €50m.

Going back even further than that, players such as Andrea Pirlo, Stephan El Shaarawy, Robinho, Clarence Seedorf, Andriy Shevchenko, Zlatan Ibrahimovic, Ronaldinho and Alessio Romagnoli came for a similar ball park figure.

In the 2023 summer transfer window Milan welcomed Christian Pulisic, Ruben Loftus-Cheek, Tijjani Reijnders, Noah Okafor and Samuel Chukwueze were five of 10 additions all in that Goldilocks Zone. No signing was any higher than Chukwueze at €20m plus €8m in bonuses.

This summer, it was the turn of Alvaro Morata, Strahinja Pavlovic, Emerson Royal and Youssouf Fofana to join from fees ranging between €13m (for the Spanish striker) and around €20m (for the Serbian defender).

Why do the club seemingly have such a set stance on this matter? Do the famous ‘Moneyball algorithms’ have something to do with it?

CEO Giorgio Furlani spoke alongside Tammy Abraham at his first press conference earlier in the week and a journalist asked him: “What the fans often don’t understand is why your policy is to sign players for €20m as opposed to going all-in for more of a match winner, at least on paper.”

The CEO responded: “I often say that in football people focus a great deal on price as opposed to value. Price does not necessarily equate to value.

“We believe that we have signed some good players that play our brand of football and will contribute to success for Milan, so the price tag is irrelevant in many ways.”

In addition to the cost-based analysis, there might also be an inherent fear of repeating past failures. Looking down Milan’s list of record signings on Transfermarkt, the top 10 make for grim reading.

Leao is down as €49.5m even if his initial fee was lower, then there is Bonucci at €42m, Rui Costa at €41.3m, Lucas Paqueta at €38.4m and Andrea Silva at €38m.

It gets even worse from there: Caldara at €37.7m, Charles De Ketelaere at €36.5m and Krzysztof Piatek at €35m. There is only really Rui Costa, Filippo Inzaghi (€36m) and Fikayo Tomori (€34.4m) that have been worthwhile investments, and two of those are perhaps debatable.

Still, just because there have been bad investments in the past does not mean that all will be bad in the future. When Milan recruit starting-level players so the team can aim for bigger things, the feeling is that players in the €15-20m region will not cut it.

Then there is, of course, the issue of the head coach. When the decision was made to part ways with Stefano Pioli a number of different profiles were linked and in the end Paulo Fonseca arrived on a deal worth €2.5m net per season, as per Fabrizio Romano.

Pioli and Milan ended an almost five-year relationship at the end of last season but his contract was never formally terminated, which means it continues to run and he is being paid €7.5m gross (€4m net) until June 2025.

Adding Fonseca’s €4.7m gross deal to that means a total commitment of €12.2m for the 2024-25 season on coaches past and present, therefore over €1m per month.

Might that explain the decision to go for a ‘cheaper’ option? Who knows, but for the new coach – the one supposed to take Milan to the next level, winning trophies – to be earning substantially less than the man shoved out of the door might be the most alarming display of ambition (or lack thereof).

Renewals and the future

If you are tallying points either way at this point, now is a good time to summarise: the squad costs have increased largely due to the five new signings and lack of permanent sales, but the amount of each transfer fee remained flat and the coach is now being paid quite a lot less.

This is not what Gerry Cardinale will want to read, but if Milan really want to continue their progression on the field then there is a price to pay, and it must be paid sooner rather than later. Why is that? Some important renewals are coming.

Most fans would agree that the star players in the current squad are Mike Maignan, Theo Hernandez and Leao. The crossroads approaching is that the French duo have contracts which expire in June 2026, so at the end of next season.

There are widespread reports claiming that both the goalkeeper and the left-back are wanting €8m net per season to renew, which would see them surpass the Portuguese winger to become the highest paid players in the squad. As with all negotiations, the compromise could be around what Leao gets now.

However, negotiating the renewal of Leao – signed last year, running until 2028 – was far from easy. There was a fine issue to resolve involving Lille and Sporting CP, a tough agent to deal with in Ted Dimvula, the shadow of Jorge Mendes lurking and the involvement of the player’s father.

When the dust had settled and the ink was dried, reports in the media emerged suggesting that Milan wanted to make a renewal like that the exception rather than the norm, both because of the complexity but also the sheer weight of the financial commitment (over €32m over the duration of the deal, excluding bonuses).

Not only will the Rossoneri have to convince Maignan and Theo financially and make sacrifices on that front if they are to keep them, but they will also have to demonstrate the strength and ambition of their project and that they are serious about winning now.

If they have read up to this point, they might not be too optimistic, and both are entering the prime of their careers if not currently being in them already, and with plenty of interest from clubs around Europe.

None of the aforementioned is intended to built a bulletproof argument that spending more definitely equals winning more. To the contrary, spending more means that the pressure rises to be successful and there are plenty of examples of clubs operating very well within tight constraints.

Inter are perhaps a good example of this. Due to their critical financial problems under Suning they were not able to open the chequebook and spend huge amounts, yet Beppe Marotta masterminded the art of player trading and getting smart business done early through free transfer and loan formulas.

Planning and execution is far more important than having a big wallet, though when it comes to players and coaches if you are only willing to spend €20m on the former and €2.5m per year on the latter, you are severely limiting the the window you are shopping in and what you can recruit.

Milan need to decide what they want to be. Do they want to be the canny operators who try to find value? If so, they might occasionally stumble upon a recipe that produces something like the 2021-22 Scudetto team, which has since been dismantled without a trophy to show since.

Do they wish to take that next step towards being back among Europe’s elite, as the owners and several connected figures have suggests? Ambition comes with cost and cost comes with risk, not exactly music to the ears of such a frugal ownership.

Cast your minds back to the title parade celebrations in May 2022 and imagine having those once a year on average. Can you really put a price on that? For the fans the answer is very obvious, but it’s not their money being spent.