According to the News of the World, the deal could earn the 29-year-old £50,000-a-week, with substantial bonuses, depending on performances and goals scored.
Related ArticlesMemory of Shearer haunts SouthgatePredict scores and resultsShearer's four-year dealAlves a poor benchmarkSouthgate: I am safeJoey Barton fears Newcastle could sack him and try to seek compensationOut of contract at the end of this season, and with Newcastle threatened with a season in the Championship, Owen may find himself walking away from St James' Park as a free agent come June.
Club owner Mike Ashley has made no secret of the fact that any player expecting a new contract will have to resolve themselves to the fact that terms of contacts will be significantly reduced - meaning Owen would be likely face a sizeable pay cut from his £115,000-a-week salary.
It is understood that his wage demand is the stumbling block preventing other clubs, such as Everton and Manchester City, from making an offer.
Questions over his lull in form have also been raised incessantly this season, along with Fabio Capello's constant snubbing of the striker when it comes to international selection.
No doubt wanting to play as much top-level football as he can to resurrect his chances of featuring in next year's World Cup squad, the prospect of playing in the Champions League with the Scottish champions is likely to appeal to Owen.