Luka modric needs to be replaced. he had a good chance but he was not able to do final execution. His shot was not even on target. Barcelona has got less ball possession but it was able to give the same pressure through the use counter attack. The goal that happened with madrid was caused by own goal. Barcelona and madrid played equally in the last match of copa del rey. Benzema tried to make a goal but it was getting annulled due to the off side. Some players like modric get older. It can be seen from his performance in the last match against barcelona was not so good.
Luka Modric is helpful for Real Madrid if they use him appropriately. They can not use Modric like when he was young, because at his 37 age, he is no longer able to play 90 minutes for all matches. In World Cup 2022, he still played well but Croatia had to replace him by younger midfielders in some matches. Modric can be useful if Real Madrid plan to use him only one half of each match and in future, he will more probably stay on bench at match debuts and only join if Real Madric need big changes in attacking.
I have the exact opposite opinion of you.
Despite turning 37 years old, Luka Modric is still showing high form and is an irreplaceable pillar at Real Madrid. While at the same age, many other class players have gradually lost their peak form, typically Ronaldo and even Messi. But that does not seem to happen with the Croatian midfielder, Modric still played the full 90 minutes in the matches and did not show any fatigue, did not fall behind. At the last World Cup, Luka Modric made a great contribution to helping Croatia win tickets to the semi-finals.
With his form intact and not looking "old", Modric is too deserving of a new contract at the Bernabeu, not a replacement.