The Spanish capital club visits Bayern on Tuesday in the first leg of the tie as it looks to secure its 10th Champions League (or European Cup) crown in history.
"From my point of view, Madrid are slight favourites," Schuster told Bild. "They are having a great season in all competitions and in La Liga they are above Barcelona, who keep being the best side in the world."
Schuster, who is currently without a job, then stated that Bayern will need to stop Madrid's quick attacking play if it want to advance past the Spanish side.
"Madrid's defensive players are not involved in the attacking flow of play, so they give the ball right away to Xabi Alonso," the 52-year-old explained. "It is important to prevent that from happening. If Cristiano Ronaldo and the rest of the attackers have to move down the pitch to get the ball, they will end up getting tired.
"Moreover, every time that Madrid lose the ball in their own half, it damages them badly."
The return leg at the Santiago Bernabeu is scheduled for April 25.Follow GOAL.COM USA on