WITH Newcastle chairman Freddy Shepherd ready to begin compensation talks with Bolton Wanderers, one of Sam Allardyce's former employers has described his likely installation as Magpies manager as poetic justice for the club he has left behind.

Despite Sven-Goran Eriksson's representative confirming his client's interest in the vacant managerial position at St James' Park yesterday, and sources in France linking former Liverpool boss Gerard Houllier with the post, Allardyce remains the preferred choice of the Newcastle board.

But as the Midlander still had two years of his former contract to run when he walked out of the Reebok Stadium last month, Bolton chairman Phil Gartside is demanding compensation before he allows him to take up another managerial post.

Given his much-publicised dispute with Gartside regarding Glenn Roeder's appointment as Newcastle boss, Shepherd, who pulled out of a Soccerex football conference at Wembley Stadium yesterday to focus on matters on Tyneside, is likely to drive a hard bargain when he makes formal contact with his Bolton counterpart next week.

Gartside is certain to demand a seven-figure settlement before he officially severs Allardyce's ties with the Trotters, but his position could be undermined by the events that led to 52-year-old becoming Bolton manager eight years ago.

Back then, Allardyce walked out of Notts County despite being contracted to the Meadow Lane club and, while Bolton were fined after being reported to the Football League, they were not ordered to pay compensation for his services.

"Let's say the circumstances in which Sam departed left us feeling we had been short changed," said Geoff Davey, who is still the chief executive at Meadow Lane.

"I didn't know Bolton chairman Phil Gartside at the time, but I've subsequently met him a few times and happen to like him. At the time he did what he had to do for his football club and I don't hold any grudges.

"But there will be an awful lot of supporters of Notts County who will feel he has probably got his comeuppance if Sam Allardyce turns out to be the next Newcastle manager.

"I think there are certainly parallels to be drawn between what happened to us and what might happen to Bolton."

Allardyce is expected to make a statement on his future at the start of next week, but he remains in pole position to succeed Roeder despite speculation yesterday linking both Eriksson and Houllier with the post.

Eriksson's agent, Athole Still, has confirmed that his client would be interested in talking to the Magpies, but sources close to the club have suggested that Shepherd has no intention of approaching the former England boss.

"There has been no contact whatsoever, but if Newcastle were interested in Sven-Goran Eriksson, I am sure Sven-Goran Eriksson would be interested in talking to Newcastle," said Still.

"Sven is very keen to get back into club football and he would be interested in talking to any club which had real ambition."

Houllier's potential candidature is a more interesting proposition, as the former Liverpool manager was briefly linked with a possible director of football role at St James' Park before Roeder's permanent appointment was rubber-stamped last summer.

The Frenchman has just led Lyon to their sixth successive French title - his second since taking over at the club - and his employers currently enjoy a 19-point lead over second-placed Lens with three games to play.

Houllier, who won three trophies in one season during his six-year stint at Liverpool, is expected to leave Lyon for a new challenge this summer and sources in France suggest he feels he has "unfinished business" in the Premiership.

No decisions will be taken on the make-up of the Newcastle squad until Roeder's permanent successor is in place, but the current confusion may have already ended the club's hopes of signing Reading contract rebel Steve Sidwell.

With Aston Villa, Chelsea and Everton having joined the race for the free agent, Newcastle's chances of signing Sidwell appear to have all but disappeared.

* Steven Taylor is rated 50-50 for Sunday's game at Watford as he recovers from a thigh injury.