The alleged contract is for five years, ending in 2019, and would give Kroos a net salary of €5 million (equivalent to approximately €11 million gross in Spain and just over €9 million in Germany) annually. His current earnings at Bayern are €4.5 million gross, according to SportBild. Although Bayern have offered him a new contract, the player has not accepted. And as ESPN has cited, president Karl Hopfner is unwilling to present a new offer to the player, whose contract expires in 2015.
Kroos' agent, Volker Struth, told Bild (h/t Telegraph) in April that his client would see out his contract at Bayern, but Hopfner later said that Bayern would "not overstep certain financial limits" meaning that if a sufficient offer is tabled, the club would sell the 24-year-old. The Marca report claims a transfer fee in the region of €25-30 million is being discussed between the clubs.
When Pep Guardiola's arrival as Bayern coach was announced in January of 2013, it appeared that Kroos stood to benefit most among players in the German giants' squad. A central midfielder with distribution ability well beyond that of any of his teammates, the ex-Hansa Rostock youth player was tailor-made for Guardiola's tiki-taka system. But the trainer decided to sign his former Barcelona protege, Thiago Alcantara, complicating Kroos' situation.
Thiago's season was blighted by injuries and when fit, perhaps he was not started quite as often as Guardiola had intended. Per Transfermarkt, he played in 25 games, starting 19. Of those in which the Spaniard was named to the first XI, Kroos started 13. Regardless, there is and will foreseeably continue to be some competition between the pair, whose roles on the pitch overlap. Although more capable in the final third, Thiago was typically used deeper than Kroos—and in the German's most appropriate role as the architect of the Bayern attack from a position more in midfield than between the middle and forward lines—when the two played at the same time.
Should he join Real, Kroos will not have competition for such a role. He will in all likelihood take over for Xabi Alonso, who despite recently extending his contract with Los Blancos, probably hasn't much time left as a starter. He turns 33 this November and Kroos will be direct competition for his spot in the lineup. Sami Khedira could well be sold following his cruciate ligament surgery, leaving only Luka Modric as an established, relatively young, natural central midfielder in Carlo Ancelotti's side.
Kroos will also face competition from younger players, but those are not quite as threatening as Thiago. Asier Illarramendi should be more worried about Kroos than the German of him, especially considering the Spaniard's inability to impose himself last season. Others, like Angel di Maria and Isco, despite playing in central midfield under Carlo Ancelotti last season, are naturally attacking players who will have to prove that even out of position, they can offer what Kroos cannot in his favored role—an exceptionally tall order indeed.
Kroos spent one season at Leverkusen and two at Bayern under Jupp Heynckes and was by all accounts comfortable with his situation. But he's won everything he could at Bayern and according to Raphael Honigstein of The Guardian, he sees Bayern's refusal to pay him in the region of the wages of Bastian Schweinsteiger, Philipp Lahm (both €10 million) and Arjen Robben (€8 million) as one that keeps him out of the club's political elite as he enters the prime of his career and as those elites approach their latter years. Thiago being given €8 million as a direct competitor could not have been seen as a vote of confidence, either.
If he moves to Madrid, Kroos can expect to be to Di Maria what Thiago was to him. He won't be regarded as Sergio Ramos and Cristiano Ronaldo are, but as a newcomer, that cannot be considered a snub. And his sky-high wages will provide comfort in any case.
The Marca report claims that Chelsea and Manchester United were also interested in signing Kroos, but the player has chosen Real. And at this point, it makes perfect sense for him to move to Madrid. United are at the beginning of a rebuilding period while Chelsea still are likely a year or two from their peak. Bayern as well are in a stage of uncertain identity, with the club's bosses apparently committed to Guardiola's plans to make substantial changes to the team that Heynckes built—a process that could take some time.
Real are currently the best team in the world. They won the Champions League after obliterating Bayern and better yet, there is room in the starting XI for a player like Kroos. Real are a huge club with a rich history and importantly, represent a new challenge. From financial, sporting and personal perspectives, Kroos would be making a rational and timely move if he were to become Real's next Galactico.