Schalke remain hopeful of keeping Ivan Rakitic, despite interest from Atletico Madrid.
Atletico are eyeing Rakitic as a Bosman signing for next season.
"Talks are progressing, we have reached a certain stage," coach Felix Magath told Deutsche Presseagentur.
"I believe that we are going to find an agreement that will see the player remain at our club beyond the end of the current season.
"Ivan Rakitic is a young player and he has every chance to develop here."