Zoran Vekic, the agent of the player, met Madrid's Director of Football Jorge Valdano on Friday to talk over a new deal.
Guti's present contract was not due to run out until 2003, however, the player is one of the lowest paid players at the club and under the new policy put in place by Valdano, he merits a pay rise.
Furthermore, with this summer's transfer of Fernando Redondo to Milan, the player has been given more responsibility and has responded admirably even popping up with some timely goals.
One key issue of the new contract is that the player's image will now belong to the club.
He currently has sponsorship deals, but when they run out, the club will be the only firm allowed to use his name.
