The process of finding his managerial successor is well under way with Tottenham coach Sherwood at the top of Rovers' hit-list.
An Ewood source told The Sun: "Tim's very ambitious and he wants a manager's job. He also has Blackburn close to his heart. He'd bring the fans back too and that's crucial."
Some staff fear they are facing financial ruin with crowds falling by a staggering 40 per cent this season.
The source added: "It's a very serious situation.
"The match-day revenue is not even enough to pay the players bought this summer."