Bailey, 25 didn't feature amongst the squad which lost 1-0 dramatically in the final minute to Queens Park Rangers in the Championship Play-Off Final last weekend and having made just one appearance for the Pride Park club has been told by current boss Steve McClaren that his contract will not be renewed and free to leave this summer.
It is expected that Clough, who signed Bailey from Crewe Alexandra in 2010 will attempt to bring the right full-back to Bramall Lane. Bailey said: “Thank you to everyone at Derby. I wish the club well but now it’s on to the next challenge.”