Grant given lifeline after O’Neill rejects West Ham

Ex-Villa manager spurns £3m bonus as desperate owners to talk to Allardyce

West Ham United are running out of options after it appeared last night that Martin O'Neill was to turn down a lucrative offer from the Premier League's bottom club to replace Avram Grant as manager until the end of the season.

The club's co-owners, David Gold and David Sullivan are fearful of the potential cost of relegation, and had offered O'Neill a huge bonus of around £3m should he keep the club in the top division.

However, sources last night indicated that O'Neill had decided to turn down West Ham's remarkable deal. Now Gold and Sullivan are to reopen talks with Sam Allardyce, who remains an unpopular choice with the club's supporters, who fear he would turn them into a long-ball team.

The other alternative is to keep Grant in the job until the end of the season, although the vice-chairman Karren Brady is among those at the club who have lost confidence in the Israeli, who was appointed last summer on a four-year deal. Their relationship would appear to be beyond repair.

Sources last night indicated, however, that the former Chelsea and Portsmouth manager may be asked to remain in his job, despite the events of last weekend, when it appeared that he would be sacked immediately following Saturday's 3-0 defeat to Arsenal.

Grant clearly believed his time was up, and tossed his scarf into the Upton Park crowd at the final whistle in what appeared to be a farewell gesture. However, now it seems he may be asked to stay on.

Since arriving in June he has led the side to a Carling Cup semi-final against Birmingham City, but they are also bottom of the Premier League by a point, having played one game more than their nearest rivals.

Grant is biding his time, refusing to resign while waiting for the club to act so he can pick up his pay-off, which is expected to be in the region of £5m, or stay on. However, if he is going to be sacked, Gold and Sullivan need to act quickly and bring in a new manager as soon as possible, because the January transfer window closes in two weeks' time.

O'Neill, the former Leicester City, Celtic and Aston Villa manager, had been the club's preferred option and he appeared ready to come, with Steve Walford as his assistant. But O'Neill was unsettled by premature reports at the weekend that he was to replace Grant immediately after Saturday's home game with Arsenal. He was unhappy that the stories suggested he had accepted a position before the incumbent manager had been dismissed. With O'Neill ruling himself out, Allardyce remains an alternative, as does Martin Jol, who was recently sacked by Ajax.

Relegation would have terrible financial consequences for West Ham resulting in a drop in revenues estimated at around £30m a year, although there are parachute payments of £48m over four years.

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.

The situation clearly demands a swift resolution. The former West Ham captain Julian Dicks yesterday accused Gold and Sullivan of turning the club into a "laughing stock". Dicks said: "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 Wolverhampton Wanderers. 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."