The Owls’ hopes of landing Lewis McGugan on a permanent deal could have suffered a setback with Watford set to part ways with boss Slavisa Jokanovic.
It has been reported that the Hornets have approached former Atletico Madrid boss Quique Sanchez Flores to become their new manager as they return to the Premier League.
Jokanovic is out of contract at Vicarage Road and talks are said to have broken down, despite the Serbian guiding Watford to promotion.
The managerial situation at Watford will be closely monitored by Stuart Gray, who has said on numerous occasions that he would be interested in bringing McGugan back to Hillsborough on a permanent deal.
The attacking midfielder had two loan spells with Wednesday last season - both of which were sanctioned by Jokanovic.
Any new manager at Watford is likely to assess his squad before deciding on which players to let go.
McGugan has a year remaining on his deal at Vicarage Road and is likely to have attracted potential suitors other than the Owls after good performances in his loan spells. It is expected the Owls would have to pay a six-figure fee should they pursue the signing of the 26-year-old.
McGugan made 22 appearances for the Owls over two loan periods last season, scoring three goals.