Manchester United have reportedly given up in their pursuit of Luka Modric after baulking at Tottenham's lofty valuation of the Croatian midfielder.
Modric is seemingly set to leave White Hart Lane this summer and has already hinted that his immediate future lies away from the club given his Champions League ambitions.
Manchester United had been identified as one of the frontrunners to secure a deal for the 26-year-old as Sir Alex Ferguson continues his search for a long-term successor for Paul Scholes.
However, according to Goal.com, Ferguson has conceded defeat in the race to sign Modric after deeming Tottenham's asking price of £40 million as too pricey for United.
Chelsea, Paris Saint-Germain and Anzhi Makhachkala have also been credited with interest in Modric, but a move to Real Madrid is seemingly the most likely outcome for the Croatia international.
Modric's representatives have reportedly already held talks with Real president Florentino Perez, while it is claimed that Modric is ready to reiterate his desire to leave Spurs in a meeting with the club's chairman Daniel Levy this week.