I would certainly extend the contract, even taking the figures into account.
Doing the math, he surely would make a heck of a lot of money. That's 2.5 million a year in basic wage plus up to 4 million in bonuses. However, looking at the rl rates, this seems to be totally okay for a striker who just ribs the EPL to pieces, maybe even fairly cheap.
With him on your team, you should be able to refinance the guy via the sporting success and the according TV prize money and additional gate receipts from additional cup rounds or even from European Cup competitions he might make you reach singlehandedly.
Also, should your club at a certain point not be able to bear the expenses on him anymore, you would surely be able to sell him for more than the current release clause. The difference in income between that current release clause and the possible future transfer income would very likely exceed the additional cost of the contract extension. I.e. this construction should actually MAKE you money, assuming that one day you would just have to sell him.
That added to taking advantage of his truly stunning performances for a year or two longer would for me definitely turn the scale towards signing that new contract.
hth

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