"Luka really wanted to go to Newcastle, but they would not pay more," a source in Zagreb told the Sunday Sun. "Dinamo asked for £25 million and also Modric wanted a little more money in wages - but not much more.
"So it is strange that the transfer with Tottenham would be agreed for much less money."
United had held a second round of talks with Zagreb vice-president - and Modric's agent - Zdravko Mamic in London on Friday.
But although Modric believed he was Toon-bound as late as Friday night, the Croatian starlet never set foot on Tyneside.
Mamic and his brother were in Newcastle for talks on Tuesday, but Modric was NOT with them.