The New Orleans Saints received written permission from the NFL to negotiate a contract extension with suspended coach Sean Payton, ESPN.com reported Sunday.
Payton and the Saints agreed to a contract extension a year ago but the league rejected it in March because it contained language that Payton could opt out if general manager Mickey Loomis was suspended or left the team.
Loomis was later suspended eight games and Payton a year because of the Saints' bounty scandal.
"The league office has communicated fully on this matter with the Saints and we are confident that it will be resolved in an appropriate and timely fashion," NFL spokesman Greg Aiello said.
Loomis returned from his suspension last week. He told the New Orleans Times-Picayune that he believes a contract extension with Payton will get done.
"I absolutely expect Sean to be our coach next year and going forward," he said. "These contract issues will be resolved."
If a deal is not worked out, Payton will become a free agent and several teams would likely pursue him. However, Payton said he plans to return to the Saints next season.