I hope this happens, Alaba has turned down a new contract offer from Bayern Munich. However, reportedly Barcelona and Manchester United are interested in signing him. The last news I read, the agent from Alaba has even spoken to Barca. But we know that Barca is going through a financial crisis, so I think it's still Manchester United who are Madrid's rivals. But Manchester United is not at UCL this time, so Madrid have more chances.
Both Barcelona and Real Madrid are in troubles with financial conditions and results in leagues. I don't see the reasons for Alaba to leave a strong club and join a troubling club without any big financial incentive. That I don't think Barcelona and Real Madrid will be able to give a good contract for Alaba.
Manchester United has better conditions than Barcelona and Real Madrid. They are getting good results after the transfer of Bruno Fernandes and with Alaba, they will have another great piece to finish their squad. Man Utd. also can satisfy the salary request from Alaba. Also I think Alaba can adapt to play good in Premier League.
You may think that Barcelona is in "big" trouble but these are huge clubs, they could be in debt for hundreds of millions of dollars and still postpone payments and make them lower but longer in order to get any player they want, they could even get a loan from a bank instead of paying all at once which they usually do.
So long story short we are talking about Barcelona and Real Madrid here, they have nearly endless amount of money, of course they do not want to pay too much or get in financial trouble too much, but if they see a good deal, they will definitely get into it, there is no way they will back up, they are not in that bad situation. United is the same situation of course, they are one of the best clubs for brand awareness and they keep making a lot of profit thanks to it, and they can still get any player they want for any money as long as the player agrees.