I've not found that £8m/€10m in the Spanish press yet - the last figure I read was €20m. I wouldn't be surprised if the did bring the price down but I'd be surprised by the timing. Madrid want to know how Chelsea, Arsenal, Bayern etc respond.
Wages wise he won't be cheap, but they might not be insanely high. He wasn't especially highly paid at Madrid - €2m after tax, that's about £65k/week pre-tax but he'll want a big payrise to move, otherwise he'll sit the contract out and get a signing fee instead. Madrid offered to negotiate a new contract but he turned them down, probably not on financial grounds but partly at least because he feels their new signings mean he's not going to be a starter.