That formation is going to need defensive sacrifice from Ronaldo and Bale, otherwise team will just bypass the clogged midfield for the open wings, or just drag Modric and Kroos to the respective wings where they could be exposed for lack of pace and agility. Don't think that formation would be ideal vs an English team who likes to play down the wings. Probably more effective against some La Liga teams though.
I could see Sterling running riot on that left defensive wing and causing Ramos to get sent off.
This team will get murdered by Barca, it's like committing suicide with Messi in the opposition squad. Pepe is a psycho who even himself don't know what he is going to do next, Ramos will most probably get his mandatory red card in the 80 th minute with Varane in crap form doesn't bode well for the team. Caravajal and Coentrao should play as defensive wing backs to control Suarez and Neymar for Mad-rid to have any apparent chance against us.
The idea is more that you let the opposition have the wings and then you rely on Ramos, Pepe and Varane's aerial ability to clear crosses and use the 3 center mids to hang around the top of the box and stop any cutbacks or shots. I'd agree that against players like Sterling, Neymar, Messi etc. it would be dangerous to let them have all that space, but against a team like Atletico I think it might be worth a shot. They could also try something like this
--------Ronaldo------------Benzema-------------Bale------------
------------Rodriguez--------Kroos-----------Modric-------------
-----Coentrao---------Pepe-----------Ramos--------Carvajal----
--------------------------------Iker---------------------------------
Barca-esque 4-3-3, with Kroos functioning like Busquets, Modric like Xavi, James like Iniesta. It would be a lot more aggressive and direct, and rely more on stretching the play and switching the field rather than triangles in the middle, but with individuals of that talent I think it could work.