Nigel Pearson will be manager of Leicester City at the start of next season. Speculation has been rife since the end of the campaign that Pearson was set to be sacked by City after their failure to gain promotion to the Premier League. National newspaper reports have frequently speculated that City's owners were set to make a change. However, the Mercury understands Pearson's position is safe and he has begun planning for next season's promotion challenge with the club's hierarchy. City only missed out on a place in next Monday's play-off final at Wembley after a dramatic final minute at Watford last Sunday when Anthony Knockaert saw his penalty saved and Troy Deeney scored for the Hornets on the break 20 seconds later. It was the closest City have come to promotion since Pearson's first tenure as manager, when City were again denied a place in the play-off final after a dramatic penalty shoot-out at Cardiff City in 2010. The season before that he lead City to the League One title in his first campaign in charge. Pearson has put together a young squad with scope to improve and develop, and it is understood the club's owners, the Srivaddhanaprabha family, feel progress has been made under Pearson. Also, Pearson has shown he can operate wisely financially and his squad now has more assets than before, with players who have a strong market value because of their potential. With Financial Fair Play regulations due to come in next season, the way Pearson has operated in the transfer market, to remove high wage earners and recruit young and hungry players, is considered an asset. With the backing of the board, Pearson will continue to move on players he deems surplus to requirements and high wage earners, such as Jermaine Beckford who is the subject of Bolton's attention. Then he will be given the funds to strengthen his squad and build on the progress made this season.