Update: Chelsea have announced that Carlo Ancelotti will take over as manager in a 3-year deal.

Carlo Ancelotti’s contract at AC Milan has been terminated by mutual consent and technical director Leonardo will replace Ancelotti as manager next season.

Ancelotti:

“In agreement with the club, we have decided to bring forward the expiry of my contract. This beautiful adventure at Milan is over. I can’t say anything else official. I have not made any agreement with any other club. I am certainly not staying in Italy.

I have agreed to leave Milan. The decision was by mutual consent. But a move to London is not certain yet.”

Ancelotti had previously stated that he was 100% certain to stay at Milan next year (perhaps it’s part of his contract to lie) but had added: “I am open to anything. It’s obvious I would say yes if you ask me if I would love to coach Chelsea.”

And as it has been reported elsewhere, Ancelotti has written in his autobiography – ‘Preferisco La Coppa’ (I Prefer The Cup) – that he met Abramovich last year and recommended that they sign Ribery and Alonso to turn Chelsea into a team that plays attractive football.

Although there has been no official statement from Chelsea, it is expected that Ancelotti will be signed as Chelsea manager next week. Earlier, Michael Ballack who has verbally agreed to extend his contract by another year, had said that about the Ancelotti deal that: “It’s not done yet but it looks like he will be coach.”

The question now is whether Leonardo will be able to deliver on the expectations placed on AC Milan, and also where this leaves Frank Rijkaard, who has been out of management for an year and was expected to re-enter management this summer with Chelsea or AC Milan reportedly his most likely destinations.