Dispute delays O'Leary's return

David O'Leary will delay any move back into management until he has settled his pay-off dispute with Leeds United. The Irishman, who is in the frame to replace the sacked Peter Reid as Sunderland manager, is heading for a Premier League tribunal later this month to settle his claim for £3m.

Sources close to O'Leary say that he will not consider an immediate return until the issue is settled, even though the timing is unfortunate. O'Leary feels that he should be given the settlement in full, but Leeds will argue that he overspent on players and affected the club's share value during his time in charge.

It will be the first tribunal since the Premier League made such a proceeding possible seven years ago. The Leeds chairman, Peter Ridsdale, is set to present the club's defence, while O'Leary's solicitor, Michael Kennedy, and the League Managers' Association have prepared his case.

Sunderland have a short-list, and O'Leary's reluctance to make a commitment, along with George Graham's lack of interest appear to have left the Republic of Ireland coach, Mick McCarthy, in a strong position. His compensation fee would not be huge ­ although sources at the Stadium of Light last night denied that they had any intention of approaching the Yorkshireman.

Derby moved quickly to dismiss speculation linking their manager, John Gregory, with the Stadium of Light. "John has said that he is very happy at the football club," a club spokesman said. "He signed a three-and-a-half year contract in January and is happy at Pride Park."