The Bernabeu giants have dipped into their seemingly bottomless pit of cash four times already during the close-season, splashing out more than €200 million on Kaka, Cristiano Ronaldo, Karim Benzema and Raul Albiol.
And the 31-time la Liga winners have made no secret of their desire to continue their spending this summer on midfield pair Alonso and Bayern Munich star Franck Ribery.
However, returning president Florentino Perez's hopes of adding Alonso to his stellar squad have narrowed, after Valdano revealed that Liverpool's valuation of the Spain international - believed to be around £30 million - supercedes what they are willing to pay.
"Xabi Alonso is a priority if he fits into our budget, and this doesn't seem the case," he told radio station Onda Madrid.
"We are very far from the figures that Liverpool have set out."
And in a seperate interview on Cadena Ser he added: "Liverpool have taken up a difficult stance over Alonso.
"We are studying many alternatives. We want someone who can channel the play and there aren't many like that in the world.
"After the great players who have arrived, we aren't in a hurry."
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