Fabregas current contract will expire in the summer but current Blues manager, Maurizio Sarri wants the club to give him a new deal.
The Spain international is free to begin negotiating with other clubs over signing a pre-contract agreement in the coming year, with Milan touted as potential destination.
When asked about signing Fabregas, Leonardo told Sky Sport Italia, “We evaluated it, considering the possibility, but didn’t go all in. We are still evaluating the conditions.”
Milan is still having issues with the financial situation after the club were punished by UEFA in June for breaking Financial Fair Play rules.
They were banned from playing in this season’s Europa League but the club managed to overturn this.
Leonardo admitted the club’s financial situation is still on their minds when it comes to signing new players, stating: “There could be an economic sanction, we’ll see what happens.
“We do have a very negative balance sheet. We’ll certainly do something on the market, but we’ll take it slowly.
“Unfortunately, with the Financial Fair Play issue it has become a puzzle and a difficult one to work out. We need to wait and understand what we can actually do.
“The owners want to invest, but there are parameters to be respected.”
