It seems highly unlikely that O'Neill would get an initial five-year term and the members of the Stoke board who preferred Gary Rowett and then Sanchez Flores may yet prove resistant to anything more than a fairly short term deal.
The Potters are looking to bring in a replacement for Mark Hughes after he was axed following a dismal Premier League run and subsequent FA Cup exit at the hands of League Two Coventry City last Saturday.
The former Benfica and Atletico Madrid boss said in quotes reported by the Spanish press: "I am and will be coach of Espanyol".
The 65-year-old has managed Leicester, Aston Villa and Sunderland in the Premier League, while he also enjoyed a successful spell as Celtic manager.More news: Bill Gross sees 'decaffeinated bear market' on the way for bonds
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O'Neill had attended the Soccer Writers' Association of Ireland annual banquet on Friday evening when it appeared that Sanchez Flores was on course to be appointed. "I don't have to explain anything else".
Sanchez Flores, who is under contract with La Liga side Espanyol until 2019 but has a release clause in his deal, had been Stoke's first choice to replace Hughes.
He will now need to make a strong statement of intent if he is to sign a new contract with the FAI, with Ireland Paul McGrath among those suggesting the circus surrounding O'Neill in recent days has left a lasting stain on the Irish game.