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The financial impact of the Renato Sanches signing is small for Bayern Munich

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The Renato Sanches transfer agreement is a smart piece of business from Bayern Munich

Lennart Preiss/Getty Images

The Renato Sanches signing is on it's face an enormous expenditure. €35M for an 18-year-old box-to-box midfielder is a good deal of money and for a Bayern Munich team that's already stacked with impressive midfield talent, it almost seems unnecessary. When you add on the performance incentives on the contract, and look at a potential lump sum of €80M, your eyebrows should be raised. However, the actual financial impact of this signing is fairly paltry for Bayern Munich.

At the outset, these are huge figures for an 18-year-old. But they're also unsurprising given the Antony Martial transfer Manchester United put in place last summer and their intimate involvement in the transfer bargaining process with Sanches. While reports range wildly on their actual involvement, the fact that Bayern Munich would step into the middle of this process and sign Sanches to this type of transfer agreement does suggest how highly they regard the player.

But when you break down the Sanches deal, it's actually quite a nice piece of business even though it's very atypical of Bayern Munich. The breakdowns come courtesy of Portugese site, Record, who broke the details early Wednesday morning. Here they are:

  1. An initial transfer fee of €35M as well as €45M in performance-based incentives over the next five years
  2. €5M per season should Sanches accrue 25 appearances
  3. €20M in incentives for FIFA Ballon d'Or nominations (the final three and not the shortlist) and FIFA World Best 11 nominations
  4. A €1.5M net annual salary (~€3M gross in Germany with the tax rate)
Armed with this information, it's easy to break down just how much Renato Sanches costs Bayern Munich per season. The €3M in base wages and a €7M per annum transfer amortization put Sanchez at a total hit of just €10M.

Wages(€M) Transfer (€M) Total Adder (€M) Perf. Total Adder (€M) BdOr Total
2016/2017 3 7 10 5 15 4 19
2017/2018 3 7 10 5 15 4 19
2018/2019 3 7 10 5 15 4 19
2019/2020 3 7 10 5 15 4 19
2020/2021 3 7 10 5 15 4 19

That's far below what other recent high profile transfers in Arturo Vidal and Mario Götze -- and probably Mats Hummels as well -- have cost this team. Their wages have been reported to be in excess of  €10M and coupled with amortized fee of €8M per season, it's clear that Bayern Munich are getting a high caliber player for far less than it cost for either of those two.

If Renato Sanches hits that first performance level, ie clearing the 25 appearance threshold, then Bayern Munich start shelling out coin as his yearly hit goes up 50%. While a €15M hit isn't particularly egregious, it does start to fall in line with what we'd expect from a regular contributor. While we don't have details in any way for the Best 11 and Ballon d'Or breakdown it wouldn't surprise me if it was something like €4M per season that he makes the Best 11 and the whole €20M adder comes due if he ever is part of the final Ballon d'Or list. Admittedly that's purely speculation. So instead amortizing that extra €4M over the life of the contract is probably the best way to go.

So at the end of this, if Renato Sanches becomes a truly unstoppable player in the mold of Vidal at his peak, then his total hit each year is likely €19M. That's in line with what Arturo Vidal himself costs. I think we can all live with that.