The player overtakes the DAVID SILVA option after this opeartion looks difficult from the Manchester City stance. The Tottenham stance on Modric is no less difficult but it seems Real Madrid Coach Mourinho see Modric as a better fit.
Real Madrid is rumoured to have already made an offer of 37M€ & Jose Mourinho has apparently contacted Modric to express his interest to the player in joining Real Madrid. The tactic is clear, convince the player that he will win titles at Real & thus motivate the player to force his transfer from Tottenham. Difficult task if you keep in mind that Tottenham new Coach Villas-Boas does not want to lose Modric.
Another point to bear is that Modric plays in an area where Kaka plays. Thus if Modric were to arrive & exit from Kaka would be needed. This is proving to be difficult move at Real Madrid in convincing Kaka to leave ( earns 7-8M€ /year) & finding a Club willing to pay.
Therefore, if all these rumours on Modric are true it may turn out to be a "summer transfer soap-box", giving media plenty of content to fill its news sections over the off-season. Stay tuned!