Watmough was forced into retirement this year through injury after joining the club in 2015 on a four-year $3 million deal.  

The Eels’ insurer, QBE, rejected to pay out Watmough's contract on the basis the 33-year-old’s knee injury was pre-existing.

Now faced with the prospect of paying out the seven-figure sum, Parramatta were hoping to settle with the former Manly star for a lesser amount. 

Watmough had an option to play the final year of his contract and the Eels believe they should be absolved from paying him that portion considering his injury and the fact he would not have played anyway.

He has been paid in full for seasons 2016 and 2017.  

In an effort to gain some bargaining power with Eels supremos, Watmough is believed to be considering returning to training this pre-season.

Should he do so, his 2017 and 2018 earnings would form part of the salary cap which would be catastrophic for the club who are believed to be close to maxing out the cap.

Watmough’s earnings do not form part of the cap at present as he has retired through injury.