City chairman Thaksin Shinawatra is ready and able to slug it out with rival billionaire Roman Abramovich in a big-money head-to-head over Modric and any other top player who can be lured with hard cash.
City have been forced to act quickly after discovering that talks had taken place in London between Chelsea's Russian owner Abramovich and Dinamo Zagreb vice-president Zdravko Marnik three weeks ago.
Modric is one of at least three major signings who Stamford Bridge coach Avram Grant has identified could put Abramovich's team back on top of the pile.
