It is understood that Graham offered Sherwood a salary increase to move to the capital, but Sherwood would prefer to stay at Ewood Park if can negotiate a rise in pay to around pounds 1m per season. The player has already rejected one improved contract offer from his club.
Sherwood, who turns 30 on Tuesday and has three-and-a-half years to run on his current deal, is unhappy with how his club has handled contract negotiations. "I'm very disappointed that we have been unable to agree terms," he said.
"From the start of the negotiations, which I consider have dragged on for too long, I've come a lot closer to Blackburn's figure than the club have to mine. I have been negotiating a new deal, but I let the manager know I don't want to leave the club."
Graham has said he wants to make "lots of new signings" for Spurs, but whether Sherwood will be one of them will depend on whether Rovers decide they will increase his salary to keep him. The strength of Sherwood's hand in negotiations may be weakened by the fact that Rovers yesterday completed the pounds 4m signing of Jason McAteer from Liverpool and the newcomer could come in as a direct replacement for the club captain. Rovers' manager, Brian Kidd, also said yesterday that the club has a ceiling on pay, put in place by the owner Jack Walker, that cannot be broken.
"We've got a firm pay scale here and we work to that," Kidd said. "It's worked out well so far. When you're spending money it's quite right that Mr Walker asks questions.
"When I bring players in you will ask me my reasons and then when we negotiate the club has its own rules. What pleased me with Jason is that he just wanted to talk football. He wants to play and that said a lot to me.
"Matt Jansen and Keith Gillespie also wanted to come here. They could both have earned more money hanging on. In Keith's case he was a free agent in another six months.
"It's a balance. The club have also got to be fair to players as well. In the dealings I've had they have been like that. But the bottom line is whether the players want to come here to play."
Sherwood has been asking for more than Walker's limit, according to club sources, while the player feels the pay limit is not as rigid as has been pronounced. The impasse is likely to be extended, as there is also said to be interested in Sherwood's services from Wimbledon and Aston Villa.
Another player who might be a Villa employee soon, according to his agent, is Juninho. Gianni Paladini said he is "90 per cent certain" that a pounds 10m deal will go through some time in the next week.
Manchester United's Alex Ferguson admitted yesterday he will not be able to strengthen his Champions' League squad before Sunday's Uefa deadline. "It's a limited field that you are in, because so many players are cup- tied. We will not be signing anyone," he said.
Mick Wadsworth has resigned as the manager of Scarborough to take over at the Second Division strugglers Colchester United in succession to Steve Wignall, who quit last week. Ray McHale, previously the assistant manager, and Derek Mountfield take caretaker charge at Scarborough.
The Office of Fair Trading said last night it was investigating alleged moves made by the Premier League to head off a threatened breakaway by its leading clubs. The OFT will investigate whether illegal threats were made by the League to its clubs - including Arsenal and Manchester, both involved in super league talks in the summer - to stop a breakaway.Reuse content