Newcastle United have opened contract negotiations with Michael Owen. The England striker's representatives were contacted by the club late last week to begin addressing an issue that Kevin Keegan, the manager, has identified as his priority this summer and, while no details have been discussed, further meetings have been scheduled.

Owen has only one season of his present deal, which is worth about £115,000 a week, to serve and would be eligible to leave St James' Park on a free transfer in 12 months' time. That is a scenario that Keegan is desperate to prevent, particularly with the striker growing in stature since the manager named him captain in January.

Owen has hit his best form in recent matches and yesterday he hailed the “massive impact” made by the manager. His career at Newcastle has been undermined by a series of injuries since his £16million signing from Real Madrid in 2005, restricting him to 37 league starts, but Keegan is adamant that he can become “one of the greats” on Tyneside.

For that to happen, some hard bargaining may be required. Beyond expressing a willingness to enter into talks, substantive issues, including finances, have not been discussed. There is deep concern within the club's hierarchy at a wage bill that is nudging 80 per cent of turnover and Owen's salary does not sit comfortably with a desire for reductions.

Persuading Owen to accept a wage cut may be a problem - a figure of £80,000 has been reported - particularly when he could begin personal negotiations with other clubs in January. On the other hand, while Owen has been linked with Manchester United, Manchester City and Everton, few would be able to rival Newcastle's resources.

Some scenarios can be dismissed, such as the chances of JEF United Chiba, the Japanese club, succeeding in their audacious pursuit of the 28-year-old, but until sums are placed on the table, Owen's future is uncertain. That may cause Keegan and supporters discomfort, even if there will be relief that the process has started.

Yet there should also be recognition - and a sense of hope - that Owen's enthusiasm for Keegan's methods and the spirit he has encouraged are genuine. The forward played in a deeper role for the final nine matches of the season, scoring seven goals, and he admires the manner in which Sam Allardyce's replacement has set about the task of rebuilding the club.

“It was never going to happen straight away; not only did we have some tough games, but a lot of the lads were low on confidence,” Owen said. “When you lose a manager it is because results have not been good. But if you could ask for a man to pick players up and get the best out of them, it's Kevin Keegan and there's more improvement to come in that respect.

“We all enjoy training and playing alongside each other and he has brought a real feelgood factor into the club. Everyone is enjoying coming in to training and when you do that you do it better. He knows his stuff and he can see a player, see if something needs tweaking, and tactically he's very good. It's been a fantastic appointment and we've enjoyed his time.”

Last weekend Keegan and Terry McDermott watched Bafetimbi Gomis, the 22-year-old St-Etienne striker who has been compared with Emmanuel Adebayor and Didier Drogba and who has been identified by Newcastle as a potential target. Alan Smith, the Newcastle forward, has been linked with Middlesbrough and Rangers.