After struggling under Steve McClaren, Newcastle moved to appoint Benitez as their new manager back in March, as they turned to the Spaniard to keep them in the Premier League.
With some promising displays against the likes of Liverpool and Manchester City, Newcastle looked like they were about to save themselves with a win over Crystal Palace - but Saturday's 0-0 draw with Aston Villa means that Newcastle can be relegated if Sunderland beat Everton on Wednesday evening.
There is a break clause in Benitez's contract where he can leave St. James' Park if they are relegated, and it's believed that the Magpies are concerned that he will leave for a Premier League rival.
The Daily Mail report that, whilst Newcastle are hoping to keep Benitez at the club even if they are relegated, they are also fearing that he could leave for Everton.
Benitez's family are settled on the Wirral, meaning a move back to Merseyside would be appealing to the former Liverpool boss, despite his connections to the Reds.
Everton could sack Roberto Martinez this summer after a disappointing season, and it's believed that they could move to take advantage of Benitez's break clause by moving for him if Newcastle's relegation is confirmed - giving Benitez a huge decision to make on his future, as Goodison Park could be more appealing than a season in the Championship.
Should Benitez stay at Newcastle or go to Everton?