City have also negotiated a 15 per cent sell-on clause on any future transfer, although if rivals Manchester United tried to sign Diaz in the future City would be entitled to 40 per cent of any sell on fee.
City were keen to keep the 19-year-old Spaniard but believe the initial fee of €17.3m, with potential add-ons of €7.3m, represents a good deal for a player who had just six months remaining on his contract.
Upon signing a six-and-a-half year deal, he said: 'This is the happiest day of my life, I couldn't have a better gift for Three Kings Day. A woman told the paper that the unidentified...
The player, who will wear the No. 21 shirt then spoke stating: "I'm arriving at the club I dreamed of playing as a boy".
Manchester City manager, Pep Guardiola has ruled out the possibility of midfielder, Phil Foden leaving the club this January transfer window.
"The first, to play for Real Madrid; the second, to play for Real Madrid; the third, to play for Real Madrid".
City signed Diaz for a measly £350,000 from Malaga as a 14-year-old before he made his name in England.
Interestingly, reports suggest that Real Madrid has promised Brahim Diaz regular first-team action, since the midfielder is making the switch after growing disillusioned with his playing time at Etihad.
But, despite Guardiola's reluctance to let him go, it appears Diaz has decided that Real Madrid is where he will develop his career.
Real host struggling Leganes in the Copa del Rey on Wednesday, while on Sunday they travel to face Real Betis in La Liga.