Newcastle set to smash club record fee for £20m Croatia playmaker Luka Modric

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It is understood the 22-year-old midfielder, accompanied by Dinamo Zagreb vice-chairman Zdravko Mamic who happens to be the brother of his agent, was on Tyneside on Tuesday to discuss a prospective move to St James' Park.

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Toon-bound: Zareb officials have met with Newcastle to discuss the transfer of Luka Modric

But the move for Modric could be grounded by Dinamo's £25 million asking price and that has raised concern at Newcastle that his leaked visit is designed to start a summer auction for one of Europe's rising stars.

Modric and his representatives met Denis Wise and Tony Jimenez at St James' Park on Tuesday before moving onto Newcastle's training ground where preliminary talks took place about a possible summer switch to the north east.

Chairman Mike Ashley will back Kevin Keegan with around £50 million in the summer, but it is thought unlikely that he is prepared to pay half of that figure on the 22-year-old left sided midfielder.

Newcastle officials believe they can lower that fee but Modric has been linked with all of England's top four as well as Barcelona and they will face tough competition for his signature.

Keegan likes the player and knows his signing would make a statement of intent. However, he is similarly reluctant to smash the £17million record fee Newcastle paid for Michael Owen for Modric.

Newcastle officials believe they can lower that fee but Modric has been linked with all of England's top four as well as Barcelona and they will face tough competition for his signature.

Keegan likes the player and knows his signing would make a statement of intent. However, he is similarly reluctant to smash the £17 million record fee Newcastle paid for Michael Owen for Modric.

Any move for Modric could signal the end of Frenchman Charles N'Zogbia's spell at Newcastle with the talented 21-year-old having found himself marginalised in recent weeks.

The former Le Havre midfielder has been unsettled all season after being linked with Arsenal, and Keegan has promised to review his situation at the end of the campaign.

He has not been involved in the 16 for the last four games, and while the manager is reluctant to lose one of the most naturally talented players in his squad, it appears that matters may be coming to a head.

N'Zogbia joined the club as a teenager under Sir Bobby Robson in September 2004, and the Magpies were forced to fight a lengthy compensation battle with Le Havre.