Leicester deny O'Neill's claims that they have a verbal agreement which allows him to talk to other club, and while O'Neill is clearly disappointed, he has said he will abide by the Premier League's code of conduct.
"I believe that the gentlemen's agreement was a pretty important part of our conversations in the summer," O'Neill said. "We have different interpretations of what was said and that needs clarifying. I believe it is within my remit to speak to other clubs. There are a number of issues to discuss, but I have no intention of walking out."
The Leeds chairman, Peter Ridsdale, believes it would be bad for the game if O'Neill walked out on Leicester to succeed George Graham as manager at Elland Road. He also wants clarification on whether he can speak to O'Neill and reiterated that he is determined to keep within the Premier League's rules.
"I don't think it helps football if Martin just walks out," Ridsdale said. "At the end of the day he has a contract and we expect people to abide within the rules. The question, I think, is whether he has a contractual right to talk to us without us needing Leicester's approval.
"I haven't seen his contract, but I believe there is a clause in there that provides for compensation in the event of his contract not being fulfilled right to the end. Clearly, we are more than happy to pay whatever that requirement is."
The League Managers' Association has told Ridsdale that it cannot intervene at this stage.
"Martin's understanding is that he can go and talk to other clubs, while Leicester say that is not the case. It's not for us to say who's right or who's wrong," the LMA chief executive, John Barnwell, said. "Obviously we are concerned with protecting our managers, but for now it is out of our hands."
The Premier League is also keeping its distance, although it may become involved if asked by one of the clubs. It is monitoring the situation and is satisfied that none of its rules have been broken.
"If a member club comes to us and says they have a problem then we will look at it," a Premier League spokesman said. "The situation may well develop, but up to now the rules are being observed as far as we can see. The question of what was said at the meeting between the Leicester board and Martin O'Neill in the summer is a matter for them."
But Barnwell warned that the affair could become damaging to the game if it turns into a soap opera. "If they are not careful then the whole affair could drag on and on, and I don't think that would be healthy for anyone," the former Wolves manager said. "I think it is in everyone's interests that this is resolved as soon as possible.
"There are two ways it can go now and the whole thing could be resolved quickly. Either Leeds call off their bid to talk to Martin, or Leicester allow Martin to go and talk to Leeds. Either way we would like to see the whole thing settled quickly, but as I said before, it is out of our hands."Reuse content