West Ham United are understood to have offered Martin O'Neill the incentive of a bonus of around £3m should he agree to replace Avram Grant as manager on a short-term contract until the end of the season and keep the club in the Premier League.
The club's co-owners, David Gold and David Sullivan, are fearful of the potential cost of relegation. It is estimated that relegation would see a drop in revenues of around £30m a year, although there are parachute payments of £48m over four years.
The remarkable incentive they are offering to O'Neill demonstrates how desperate the situation has become at Upton Park, with West Ham bottom of the table by a point, having played one game more than their nearest rivals.
Grant remains in charge, for the moment, although it is unlikely that will be the case when West Ham travel to Everton this weekend.
Former Leicester City, Celtic and Aston Villa manager O’Neill remains the preferred option of Sullivan and Gold. He was, however, unsettled by premature reports at the weekend that he was to replace Grant immediately after Saturday's home game with Arsenal — a game which West Ham lost 3-0.
He was unhappy that the stories suggested he had accepted a position before the incumbent manager had been dismissed. Grant signed a four-year deal last summer and would be due a pay-off in the region of £5m if he is given the sack.
The stakes are high for co-owners Gold and Sullivan, who claim to have have pumped £30m into the club they bought a year ago, which has already been eaten up in trading losses. That is on top of the £50m they jointly spent buying more than 60 per cent of the shares.
O'Neill, who has been out of work since walking out on Aston Villa at the start of the season over a lack of funds to buy players, is believed to favour a short-term deal only until the end of the season.
He would bring with him only one of the two assistants he had at Aston Villa. Former Arsenal defender Steve Walford is keen to join him, but not John Robertson, the former Nottingham Forest winger.
Sam Allardyce, the former Bolton Wanderers, Newcastle United and Blackburn Rovers manager, is another option, but Sullivan and Gold are aware he is not a popular figure with West Ham supporters, who fear he would turn them into a long-ball team.
The situation clearly requires a swift resolution. Former West Ham captain Julian Dicks yesterday accused Gold and Sullivan of turning the club into a “laughing stock”.
Dicks said: “All I know is what I have seen in the newspapers and on the television. I heard one minute that Avram was leaving, then the next I hear it's Martin O'Neill who's coming in, and then he isn't. We're becoming a laughing stock really.
“They (Gold and Sullivan) have the best interests of the club and the supporters at heart, I'm sure, but they need to come out and end all this speculation and say, 'We support you' or they should sack him.”
Grant last night received support from Mick McCarthy, the manager of fellow strugglers Wolves. McCarthy said: “It is just a bizarre situation.
“It can't be fair on him or the players or anyone else. You try and focus on the job in hand, but people chipping away at it makes it hard.
“It is not a position I’d like to have. If they don't want you and they want you to go, then fine, do it.
“I wouldn't want to be answering questions about my future every single time. Someone should be able to stop that. Be straight with people, that's all I ask.”