RMC Sport says OM contacted Xabi about succeeding Roberto De Zerbi, who was dismissed last week.
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However, Xabi declined the enquiry, citing the constant climate of inconsistency plaguing the club in southern France, as reason for his decision.
OM owner Frank McCourt announced yesterday that he had rejected the resignation of sporting director Mehdi Benatia.
Instead, the former Juventus defender has been granted full control of the football department, with president Pablo Longoria's powers being watered down.
Benatia is now in charge of finding De Zerbi's replacement, with Jacques Abardonado currently acting as caretaker coach.
