Well the story was apparently that Madrid agreed to sign him but pulled out due to him not being a "Galactico" at the time, he later then signed for Zaragoza.
Milito says himself that his medical went fine and everything was set to be confirmed until the results came back about his injury and so Madrid pulled out of the move. Maybe they saw something in the results they didn't like or maybe they did actually pull out due to the Prez not wanting no name defenders at the time, possibly bullshit, I'll just pretend inside my head that the Galctico story was true tho

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