Modric, whose success sets him up as a favourite to win the Ballon d'Or world player of the year accolade, saw off former Real teammate Cristiano Ronaldo and Liverpool's Egyptian striker Mohamed Salah for the overall award.
However, it was revealed after the drawing of this season's Champions League group stage that the 33-year-old had been beaten to the award by his former club-mate. Real Madrid is guaranteed to earn at least 50 million euros ($59 million), plus a share of Spanish TV rights money and results bonuses.
United were grouped alongside Juventus, Valencia and Young Boys for a somewhat tricky Champions League group stage.
Changes brought in for this season mean half of the clubs in the group stage were allocated to the top four sides in the four best-ranked leagues: Spain, England, Germany and Italy.
However, Ronaldo's agent, Jorge Mendes, rubbished UEFA's decision of awarding the Croatian as the best player saying the decision was "ridiculous and shameful".
"It's ridiculous, shameful. The victor is not in doubt, as Ronaldo is the best in his position".
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Inter legend Ronaldo shared his delight at Inter being back in the Champions League after a long absence from European football's top continental competition.
Shakhtar Donetsk coach Paulo Fonseca has admitted neither his side, Lyon or Hoffenheim, have much chance of winning Group F in this year's Champions League ahead of Manchester City.
The best women's player award was won by Pernille Harder of Denmark and Wolfsburg.
"It's an incredible moment for me, I feel really excited and proud of this great award", said Modric.
Liverpool were drawn alongside Paris Saint-Germain, Napoli and Red Star Belgrade in Group C, while Madrid's trophy defence begins in Group G against Roma, CSKA Moscow and Viktoria Plzen.
Ronaldo, a United player from 2003 to 2009, scored when they beat Chelsea on penalties in the 2008 final after a 1-1 draw and has faced them twice in the competition since with Real Madrid.
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