Real Madrid have confirmed the signing of Malaga playmaker Isco, on a five-year deal. The 21-year-old midfielder was also being courted by former Premier League champions Manchester City, who were hoping to use the Manuel Pellegrini connection to lure the Spanish U21 star to the Etihad.

Real Madrid Confirm Isco Transfer

Pellegrini, who also spent a season at the Santiago Bernabeu, has been confirmed as the new boss at City, replacing Italian Roberto Mancini. The 59-year-old Chilean developed a good working relationship with Isco during his time at La Rosaleda, after signing him from Valencia in 2011.

Isco made 37 La Liga appearances in the 2012/13 campaign, scoring nine goals and creating one more. His performances helped Malaga to sixth in the league and a stunning run to the quarter final of the Champions League, in their debut season in the competition.

A statement on Real Madrid's website confirms the transfer, which the BBC believes is worth £23m. The statement reads: "Real Madrid welcome one of Spanish football's best players into its new project. Francisco Roman Alarcon, Isco (21/04/1992, Benalmadena, Malaga), will play at the Bernabeu for the next five seasons."

Isco becomes new Madrid coach Carlo Ancelotti's first signing and will be unveiled after passing a medical, which has been scheduled for 3 July. And speaking ahead of the transfer, Isco confirmed his admiration for Real Madrid, telling press, "Madrid excite me. They are one of the best teams in the world."

Florentino Perez Warns Ancelotti

Meanwhile, Ancelotti's honeymoon period in the Spanish capital is set to be all too brief. The former AC Milan, Chelsea and Paris St Germain (PSG) boss is one of the most decorated mangers in European football, with two Champions Leagues medals and titles at every club he has led.

However, Madrid president Florentino Perez has made his expectations from Ancelotti very clear, telling the Italian he expects La Decima in 2014... the fabled 10th Champions League crown.

"We are talking about one of the world's top coaches. As a player, he was a fundamental part of the great AC Milan side. But, you know, Carlo, that the Champions League is the most coveted trophy, both for our members and our fans," Perez told his new manager, during the latter's presentation.