Speculation over the future of the 38-year-old midfielder at the Santiago Bernabeu is rife, as he is due to see his current contract expire at the end of the season.
Modric has earned legendary status during his 12-year spell with Los Blancos, contributing with 39 goals and 83 assists in 517 appearances as well as winning a total of 23 trophies.
The five-time Champions League winner has been a mainstay in Real Madrid's midfield up until this season when he has been forced to settle for a reduced role under Ancelotti.
Indeed, Modric has started only 16 of his 29 appearances in all competitions so far this term, including just 11 starts in La Liga.
Modric continues to show his worth to Los Blancos, though, as he came off the substitutes' bench to net a stunning 81st-minute winner in a narrow 1-0 home victory over Sevilla in La Liga on Sunday.
After the match, Ancelotti talked up the qualities of veteran star Modric and issued a fresh update on his contract situation at the club.
«It's complicated. It's hard to manage. I was once a player and went through it in my last year as a professional player,» the Italian told reporters as quoted by Reuters.
«I would understand if Modric was a little bit upset if he is not playing. Everyone thinks he is at the end of his career, but I think he doesn't agree with that. He looks to be well, fresh. He's got legs. He doesn't seem like he is 38.
»He scored a great goal that allowed us to have another three points on the table. He shows everyone how hard it is for me to leave him on the bench.
«Not just for the goal he scored, but how he trains. He is an example to
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