Real Madrid were forced to give Xabi Alonso a £1.65million pay rise to keep him from the clutches of Chelsea and Manchester City, reports the Daily Mail.
The 32-year-old midfielder penned a new two-year deal at the Santiago Bernabeu earlier this week, taking his net salary to just shy of £5million per year.
Alonso had been heavily linked with a move away from Real Madrid, having entered the final six months of his contract in the Spanish capital, with suggestions that he could return to the Premier League.
Chelsea manager Jose Mourinho had been credited with an interest in bringing the Spain international to Stamford Bridge, having worked with him during his spell at Real Madrid.
Manuel Pellegrini was also understood to be an admirer of the former Liverpool star, and was ready to offer him a contract at the Etihad Stadium.
However, Carlo Ancelotti convinced Alonso to snub the likes of Chelsea, Manchester City, and Paris Saint-Germain, and commit his future to the Spanish giants, with a hefty financial reward offered as an incentive to do so.
Real Madrid president Florentino Perez gave in to growing fan pressure, and offered the Spaniard a deal that runs until the summer of 2016, with an option for a further year, providing both parties are happy to sign.