AC Milan have found themselves at a real crossroads despite the fact that they won the Scudetto last season, because some tough decisions will have to be made.
There is an abundance of discussion at the moment about what the path for the future will be under the new owners RedBird Capital and what their ambitions are for the the team, namely the level of squad that want to field and the costs they are willing to fund in order to help it grow.
The precursor to this discussion starts back in 2018, when Elliott Management took control of the club following a very aggressive period of expansion under Yonghong Li, with regards to squad costs and in particular player salaries.
Once the American fund took charge they made it clear that they wanted to clean up the accounts by trimming unnecessary costs, and the wage budget certainly has not been immune from that since.
Elliott have tightened the expenses in recent years which has created a virtuous cycle of sorts, and as part of this Milan have seen their wage budget drop from €150m gross in 2018-19 to about €100m as of last season (post the January window).
As a comparison with the teams in Italy, Napoli’s wages were €110m, Inter’s were around €130m while Juventus stood out above all at €172m gross, meaning Milan were comfortably the least of the current top four.
Looking at other league leaders around Europe, Bundesliga table-toppers Bayern had a wage bill of €192m, PSG were at €470m, Manchester City’s was €258m and finally Real Madrid paid out €401m in gross salaries for 2021-22.
#ACMilan have the lowest gross wage bill of any of Serie A’s top four plus any of the other leaders of Europe’s ‘top five’ leagues. pic.twitter.com/DRdfaIYKQp
— MilanData📊 (@acmilandata) March 24, 2022
The vision for the squad has been simple as part of this: a heavy emphasis on signing young players with high potential for transfer fees that are not astronomical and on relatively low wages, and the right experiences profiles such as Zlatan Ibrahimovic, Olivier Giroud, Simon Kjaer and Alessandro Florenzi came in to compliment the group with some much-needed experience.
However, Elliott Management (who are still in control until the full closure of the sale in September) and RedBird have reached an unavoidable issue that that they must now face, which is the fate of their internal salary ceiling.
MilanNews among many sources have reported that at present the maximum salary that Milan has chosen to pay its players amounts to €4.5m net per season, with the odd exception as seen through Ibrahimovic.
It seems to be quite an arbitrary figure with the aim of limiting the overall wage bill, but there is simply no getting away from the idea that such a policy becomes a limit when trying to take that next step, which is bridging the gap with Europe’s elite.
When those players who were signed because of their talent evolve into stars they expect to be paid as such, especially when their agents get wind of interest from other top clubs who are more than happy to offer the salary they want.
There is a compromise to be found somewhere of course, because smashing the wage budget wide open by keeping Gianluigi Donnarumma and wilting to the now-late Mino Raiola’s requests would have been a step too far, but then players like Hakan Calhanoglu – regardless of what you think of his ability as a player – was allowed to go to a city rival over a matter of €500k per year.
As Franck Kessie departs for pastures new in Barcelona, there is another very thorny issue that Milan must soon tackle and that is the renewal of Rafael Leao. Various reports are suggesting that Milan have offered €4.5m net per season to the Portuguese winger and his entourage – therefore consistent with the ceiling – but the requests are quite far beyond it at €6-7m depending on the sources you believe.
Milan must make a decision and answer the following question: for a player of Leao’s importance and potential, is it worth going beyond that internal limit? Logic says yes, because one scenario means the Rossoneri retain leverage and would send a statement regarding the seriousness of their project, while the other involves a potential panic sale next summer to avoid the risk of losing another player for free.
Leao is not an isolated case though, it must be said. There are other players within the squad who are due a well-earned pay rise and might otherwise begin to attract interest from abroad. Fikayo Tomori has been potentially the best centre-back in Serie A since his arrival, and Premier League clubs will be circling, so steps must be taken to show him how vital he is to the future plans.
Ismael Bennacer and Pierre Kalulu are also players that this applies to, and the same notion is also a factor when negotiating signings. To attract players and thus raise the level of the squad, sacrifices must be made as the global landscape of football accelerates more and more towards an inflation in salaries.
Milan have been good at discovering talents in the recent past, but the problem is so are many of the top European sides, and they often have more economic resources at their disposal. Sven Botman went to Newcastle United because they finally convinced him with the terms they offered, while Renato Sanches could join PSG to earn €1-1.5m more per year and Charles De Ketelaere may yet be swayed to join Leeds if they are given the chance to offer him a big pay day.
The hope is that the ownership are well aware of what the next stage of the project entails, and that will see the internal salary limit either abolished and done on a merit basis, or raised to a more reasonable level which is congruent with the ambitions of winning the Scudetto again and going further in Europe.
There are certain things that could help this too. The accounts are continuing to improve thanks to increased revenues post-Covid, but also through the renewal of agreements with PUMA and Emirates that will bring more money into the coffers. Plus, there is more prize money from the UCL, and more cash flow means greater margins to invest.
Now the ball passes to Gerry Cardinale, who has the not-so-straightforward task of boosting how competitive the squad is while balancing internal politics and trying to build while within the parameters of sustainability.
No doubt Paolo Maldini will be applying his own pressure, because he will know better than anyone that in other to keep building, certain sacrifices must be made.
