Hours before Schalke advanced to the quarter-finals for only their second time, Magath denied media reports he was leaving Schalke at the end of the season and at previous games he had been greeted by fans waving huge banners saying "Magath out".
This time he left the ground with fans chanting his name and wearing T-shirts reading "I like Felix Magath" after his team secured a 4-2 win on aggregate after a spirited performance against the twice Champions League finalists from Spain.
Valencia had taken the lead through Ricardo Costa on 17 minutes before Peruvian Farfan levelled with a well-struck free-kick on 40 minutes. Mario Gavranovic put them ahead with a low drive on 52 minutes and Farfan made sure of the win in stoppage-time.
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"With such games where it is all or nothing, there is a lot of pressure and when you are so stressed that you cannot really play your game," Magath told reporters of his team's sluggish start. "It was difficult to press early in the game."
"The noise before the game (regarding his contract) should not interest or affect us because the truth is on the pitch. After going 1-0 down we had nothing more to lose so we went for it."
Schalke, who last won the German championship in 1958, have made the Champions League last eight once before, in 2008. They have also won all their home games this season in the competition.
Magath's team have struggled in the Bundesliga all season but last week booked their place in the German Cup final, also advancing 4-2 on aggregate.
Early on, it was Valencia who looked to be in control of the tie, after a 1-1 draw in Spain in the first leg, when they struck on 17 minutes with a header from Costa.
The Spaniards missed a slew of chances with Schalke goalkeeper Manuel Neuer keeping the scoreline low in the first half with superb saves that have made him one of the hottest commodities on the European transfer market.
Valencia were punished for their sloppy finish five minutes from the break when Gavranovic won a free kick and Farfan curled over the wall and into the net.
The 21-year-old Gavranovic would not have even been on the pitch were it not for Klaas-Jan Huntelaar being injured and the Swiss made the most of his chance when he gave his team the lead in the 52nd minute with a shot that bounced off both posts.
Gavranovic also twice hit the woodwork late in the game before Farfan made sure of the victory after a nervy final few minutes when he dinked the ball over the keeper in the fourth minute of stoppage-time.
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