Sunderland have approached Preston North End's Simon Grayson in the search for a new manager at the Stadium of Light.
The Black Cats were relegated from the Premier League last season after numerous years of top-flight struggle - prompting David Moyes to resign after a year in charge.
A Deepdale statement read: "Preston North End have been contacted by Sunderland Football Club to ask permission to speak to Simon Grayson in relation to their vacant managerial position.
"Having spoken to Simon, he has asked permission to speak to the Black Cats and therefore the club had no option but to allow these conversations to take place, with a compensation package already guaranteed in his contract."
Former Blackpool, Leeds United and Huddersfield Town boss Grayson has been in charge of Preston since 2013, leading them to League One play-off glory in 2015 and back-to-back 11th-place finishes in the Championship.
Aberdeen's Derek McInnes was the Black Cats' first choice, but he has remained at Pittodrie.
Fabio Borini is poised to join Jordan Pickford in leaving the relegated Wearsiders, while the likes of Victor Anichebe, Jan Kirchhoff, Seb Larsson and John O'Shea have not been kept on.
Uncertainty over Sunderland's ownership had hampered their preparations for the new season, with current owner Ellis Short unable to strike a deal with consortia from Germany, the United States and Ireland.
And the American financier has decided to remain with the Black Cats for the foreseeable future in an attempt to bring stability to the club.
A club statement read: "Ellis Short and the board were committed to ascertain if this group was better placed to take the club forward in the right way and to improve it, both on and off the pitch.
"A defined timeframe was placed on discussions to ensure that the club could move forward quickly and decisively with its plans for the new season should they not come to fruition.
"We have concluded these talks and have determined that this proposed sale would not be in the best interests of Sunderland AFC.
"Ellis Short will continue his commitment to the club, both financially and personally, moving forward."
Get the best features, fun and footballing frolics straight to your inbox every week.
Thank you for signing up to Four Four Two. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.