"We've had an offer on the table for Harry and his agent to think about for some time and it's about whether he wants an extension on his contract here or to play in the Champions League," said McKenzie.
"This is just the start of negotiations though and it may be some weeks before we can finalise anything that come out of them, but we have made it clear we would like to hang onto Harry."
Should Leeds fail to agree a new deal with Kewell they will sell him rather than let him see out the final year of his current contract.
Today's Independent claims that Arsenal are prepared to offer Jermaine Pennant plus £4 million for the Aussie forward, while Liverpool and Manchester United are also believed to be interested.
