But the question that should be asked is not how much is Modric going to finally cost or even how good of a player the Croatian midfielder is, the question that should be asked is, do Madrid really need Luka Modric?
Let's get one thing clear straight away, I am by no means questioning the world class ability of Modric, a player with sublime skill and finishing ability. He would be a great addition to most teams around the world, but in my opinion he doesn't bring anything to Real Madrid's lineup.
Modric is by all accounts an attacking midfielder adept at playing behind the strikers and forwards. The problem with him at the Bernabeau will be, Madrid already has a much better player who does the same thing in Mesut Ozil.
Ozil's silky passing has become a staple for Madrid's teams of late, and reducing his playing time to incorporate an inferior player doesn't make sense. Also by playing Modric over Ozil, you are sacrificing the terrific chemistry Ozil has built up with the likes of Cristiano Ronaldo, Karim Benzema and Gonzalo Higuain. Ronaldo and Ozil in particular have combined extremely well together for Real Madrid's recording-breaking attack.
Some people might say play Modric on the left flank or central midfield as opposed to the attacking midfielder where Ozil roams. Modric has played in these positions before, both for Tottenham Hotspur and occasionally the Croatian national team. But again, at Madrid, that requires moving a superior player out of position or out of the lineup.
Should Real Madrid sign Luka Modric?
As we all know Cristiano Ronaldo's preferred position is on the left wing, allowing him to cut across the defense and shoot with his right foot, so moving Modric there would be completely and utterly asinine. Playing him in the central midfield would not be beneficial to Real Madrid as it would limit the all-around game and impact of Xabi Alonso.
Therefore the only real hope for Modric to play consistent minutes at the Bernabeau would be to play alongside Mesut Ozil and Ronaldo in the attacking third for Real. But this in turn causes the same problem Madrid faced when playing Kaka and Ozil together.
Instead of combining well and playing off one another, like Barcelona duo Andres Iniesta and Xavi, the two simply got in each other's way. After the games piled up, it became clear that Ozil functioned better as the main guy and by himself.
So as you can see there is no real place for Luka Modric at Real Madrid. If Florentino Perez and company are comfortable with spending the reported £30m transfer on a fourth or fifth midfielder, then that is fine.
However if they would like to avoid spending unnecessary money on the midfield and instead use it to find a capable right back or centre back, a position that Real Madrid are desperately thin at, then that would improve Madrid's team a lot more than signing Modric.
Madrid's midfield played with harmony and precision last season when Mourinho finally settled on his primary five guys in the 4-2-3-1 formation. Bringing in another expensive talent and forcing him into to the lineup will disturb the balance of Madrid's all-world midfield. The Modric signing would be a luxury that Real Madrid could certainly afford, but a luxury they don't need.