After nine years at Liverpool, during which time he won the FA Cup and League Cup, McManaman moved to Real Madrid in 1999. The transfer became one of the most controversial and high profile Bosman rulings of all time. He became the first English player to win the UEFA Champions League with a non-English club in 2000, and two years later became the first English player to win the Champions League twice. He also won La Liga twice before moving to Manchester City in 2003, and retiring from football in 2005. After his retirement he worked as a football pundit for Setanta Sports, ESPN and BT Sport. In 2008, he was ranked third in a Top 10 of greatest British footballers to play overseas, just behind Kevin Keegan and John Charles.
Although McManaman had a couple of quieter seasons with the advent of the Premier League, he continued to develop a reputation as one of English football's two best wingers alongside Ryan Giggs of Manchester United, with both players known to "embarrass defences with their mazy runs, which too often lack the finishing touch they deserve."
In 1993–94, McManaman showed fine form with two goals against Swindon Town and some assists including a spectacular run and assist against Tottenham Hotspur. However this form faltered following a confidence drop after an incident with Bruce Grobbelaar towards the end of a Merseyside derby, when the players exchanged blows after Grobelaar lambasted McManaman for a poor clearance which led to a goal being conceded (an incident later named as one of the top five bust ups between team mates in Premier League history).
In 1994–95, McManaman got a new million pound contract, and was given a central, freer role by new coach Roy Evans, who wanted to utilise McManaman's natural running and dribbling ability to drift all over the park. It proved a successful decision as McManaman began mesmerising defences with runs that were later to become hallmarks of the Liverpool side of the 1990s. That season he collected a League Cup winner's medal after scoring twice in his side's 2–1 win over Bolton; such was his performance that fans named it "The McManaman Final". For his second Wembley final appearance in succession he was awarded man of the match, earning the Alan Hardaker Trophy and a tribute from guest of honour, celebrated veteran winger Sir Stanley Matthews, who exclaimed after the final: "He reminds me of me when I was playing... I wish there are more dribblers like him."
By the end of 1995–96, McManaman was top of the Premier League goal assists chart with 25 assists over the season, including assists and top ratings in a match against Newcastle voted the best of the decade in the Premier League 10 Seasons Awards. By now, McManaman was ranked as one of the finest midfielders in England and had developed a strong reputation on the European stage following UEFA Euro 1996, earning praise from many at the time including Kevin Keegan, who said "there are few finer sights in world football than the sight of Steve McManaman running down the length of the pitch."
McManaman had also been noted for his versatility in his free role, switching from right to left wings, and his ability to play in central midfield, behind the front pair, or as a forward, with many notable managers including then Ajax coach Louis van Gaal, describing it as a role few could pull off the way McManaman had. McManaman was credited for making the role manager Evans gave him work, with the result being that Liverpool were playing some of the most aesthetically pleasing attacking football at the time in England.McManaman was also said to have been one of only a handful of so-called "talismanic" players along with Eric Cantona and Gianfranco Zola in the league at the time believed to have the charisma to lift supporters from their seats each time they got the ball. Managers would deploy a man-marker specifically to follow him for an entire game, with Gianfranco Zola noting that McManaman was the player the Italian national players monitored the most. Howard Wilkinson said McManaman was "virtually unstoppable" at times, while then Middlesbrough manager, Bryan Robson, was quoted as saying that "everyone in the Premiership knows that if you stop McManaman, you stop Liverpool." Roy Evans, attempting to diminish the attention on marking McManaman, stated "I would hate to think we are no more than a one-man team." German coach Berti Vogts named McManaman as one of only three Premiership players in his select European XI Team.
McManaman was once described as "England's forgotten man" but was also accused of being apathetic and having a laidback attitude and having a reputation for being a troublemaker, which began after an infamous "dentists' chair" incident before Euro96, where along with Teddy Sheringham and Gascoigne, McManaman was photographed drinking and accused of causing thousands of pounds worth of damage to a Cathay Pacific first class flight cabin. McManaman's reputation was also not aided by the fact that he was also known for being a serial prankster with Fowler, which did nothing to help new coaches' negative opinions about him, with the Spice Boys' image also making it worse, although, colleague Gareth Southgate did say McManaman and Fowler's antics though "silly", helped foster team spirit. In 2004, certain journalists even called for McManaman to be included in the Euro 2004 squad, arguing that McManaman's experience would have been worth his inclusion in the side alone, but to no avail as McManaman himself decided to retire shortly after.
