Rafael Leao set to renew his contract with AC Milan in transfer blow to Chelsea and Real Madrid

• Rafael Leao set to extend Milan deal
• Blow to Chelsea and Real Madrid
• Set to sign a new five-year contract

WHAT HAPPENED? As per La Gazzetta dello Sport, the reigning Serie A champions have held talks with Leao over signing a new deal and reportedly the Portuguese international has agreed to extend his stay at the club by another five years.

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THE BIGGER PICTURE: The signing of a new contract was delayed due to Sporting Lisbon's demands that the player owes the club a compensation of €16.5m for leaving them in 2018 and joining Lille on a free transfer. But now it is being reported that Milan held positive discussions with the Portuguese club and that the issue is being resolved amicably.

The new deal with Milan will see Leao earning €7 million per year and a verbal agreement between the player and the club has been reached.

AND WHAT'S MORE: The news of the winger extending his stay in Italy comes as a huge blow for Chelsea and Real Madrid with whom the player was linked over a move.

IN THREE PHOTOS:

(C)Getty Images

Getty Images

(C)Getty Images

WHAT NEXT FOR AC MILAN? Stefano Pioli's side will be next seen in action on Saturday when they take on AS Roma in a crucial Serie A fixture.