The Labour-run council is likely to decide before the end of the week whether to put the club into administration to avoid it being wound up – and whether to hand over more money to help the club stay afloat.
According to the local paper the ruling Labour group decided earlier this week that it is in favour of supporting the club to avoid liquidation by entering it into administration and beginning the search for a buyer.
But the award of further cash to the club would prove contentious in the wake of £24 million budget cuts, hitting services across the city, and a 3.49 per cent tax rise.
Council chief executive John van de Laarschot and legal chief Paul Hackney spent yesterday in talks over the council's next move.
Councillor Mohammed Pervez, below, the authority's leader, said: "We are very concerned with the recent developments at Port Vale Football Club.
"We're in discussions with the club and we are taking specialist advice in respect of our position as a secured creditor.
"Our objectives have always been to protect the public purse and safeguard football at Vale Park.
"The council is aware of the pressure on the club from fans, players and other stakeholders, but it is important that we collectively gather and consider all the relevant facts in order to understand the options for both the taxpayer and the club."
Sarah Hill, cabinet member for finance, said: "We are taking advice from people with the right professional expertise. We have to make sure any decisions are made with our eyes wide open.
"But decisions will have to be made quickly. There is no other option but to make a decision quickly."
A Labour group source said: "It is a no-win situation, because the council wants its loan repaid and wants to keep the club afloat.
"But it also has to look after its own money and be fair to the people who are losing out in budget savings.
"The group did not want to see the club go into liquidation."
HM Revenue yesterday moved to issue a winding up petition against the club over its unpaid tax bill. If the courts decide Port Vale is insolvent and unable to pay it will face liquidation – the end of the company.
That would mean receivers selling off all remaining club assets and using the proceeds to begin paying creditors in a strict order of priority.
Entering administration would keep the club in existence, but it still would mean administrators taking over the running of the club with the purpose of raising as much money as possible to pay off debts and balance the books.
Because the council is a secured creditor, with the cash it is owed being secured against key club assets, it would be at the front of the queue for payments made to creditors by administrators.
Finance expert Sam Corcoran said: "An administrator will look for a buyer. A liquidator will nearly always look to close the business down.
"As a secured creditor the council would have priority for payments in either case."