I don't know if they'd still win La Liga consistently (assuming RM are still spending crap loads of cash) -- they only won the league by four points didn't they? So the 50 million euros a year is buying them three points? I know they value the CL too obviously but their margin of victory domestically wasn't overwhelming so I don't think they could survive on youth alone -- that's a colossal waste of money if they could. Given how much they spend every year, they obviously aren't as confident in their youth. Still, hypothetical of course so no way to know for sure but the main point is, whether they need to or not, they spend huge sums every year.
I don't follow world football at all really -- is there a team that competes via their youth setup? Needless to say I don't want to hear about Barca (400 million on transfers in ten years) and Arsenal (100m+ on wages per year). I mean a team with truly limited resources playing in a league without any salary caps or spending restrictions which succeeds (more-so than our "success" of 6th to 7th place)?