This is actually good news in my opinion. Especially I am very happy to actually know that Luka Modrić is staying. Even though he is old, the quality of him actually surpasses anything else. Tony Kroos could also play for a longer period of time. But we all know that the Kroos is not someone to do that. You know Kroos has previously famously said that "he is retiring because he is not able to give his 100% anymore." But you know even 70% from him is good enough. That also applies for Luka Modrić as well. Florentino Pérez and CEO José Ángel Sánchez said they are in discussion about reducing Modric's salary a little Modric also accepts that and they committed money is not important here.
Anyway, I am happy that he is staying. Carlo Ancelotti is going to have a really quality player on the bench if he stays.
This is news should be more than 3 weeks ago since his one year contract deal was signed, though I'm not impressed but as a legend that he is, they keep renewing it instead of giving him a full comract, the last 3 contract his signed were chopped of 1 year but I'm sure that Modric is closed to been retirement than we we might see, perhaps after this season he will decide to stay but this time as an assistant coach to Anceloti just as the club want for Kross as well but he want to go further that place.
Players like Modric aren't supposed to be playing at this level, they have shown dedication to Real Madrid and it's not as if the new guys aren't capable of doing the job, Kroos is done and at this junction, Modric is supposed to be resting with his family as well but from his reactions and interviews, he doesn't want to play any football for club other than Real Madrid, I see that as a respect and royalty but it doesn't really matters because even Ronaldo moved on despite been the legend icon of the club.