Hmm... I dunno, but if you spread it out as a 6 turn tribute of 1000, you barely notice it- the city pays for itself with interest, and yes, you can maintain peace w/ the HRE which is essential if you're planning on attacking other factions first. And you get 5 merc xbows as a garrison free after buying it, which I used some of to attack Florence on the next turn- considering you'll have to build fairly expensive archery ranges or militia squares before you can recruit them yourself.

Also, you have to watch out for Sicily as well as Milan. In my VH campaign, they attacked Crete with their whole army and took it- course, it also left Palermo and Naples undefended. I think securing all of Italy and its rich cities is probably the best early strategy for Venice. Then you can go after just about anyone else, but I like to invade Spain or the Byzantines at that point.