Crystal Palace's Dave Bassett, who had apparently accepted a job that would have doubled his wages overnight, rang Lee at 7am yesterday morning to tell him he had had a change of heart and would be staying at Selhurst Park.
Lee insisted he was so certain Bassett wanted the job he had agreed to his request to buy a player yesterday morning as a part of rebuilding the team's promotion challenge.
"I'm devastated," Lee said. "Dave even discussed players with me last night and we were going to set the ball rolling by buying one today at his request.
"He gave me a definite 'yes' last night that he wanted the job and he told me to go out and buy this morning - I'd better make sure we have not gone out and bought the player.
"Dave told me that he was surprised how much money we were going to give him to spend on new players and it was a tremendous challenge and a great package for him. I am just shocked that he has turned it down."
City may now turn their attentions to Palace's director of football, Steve Coppell, who was favourite to replace Bassett as manager had he accepted the City job.
Bassett said: "I had to think long and hard about the decision, but I've made the decision which is right for Dave Bassett.
"It's flattering to be offered the job and I was very tempted because Manchester City are a huge club. But I believe I've made the correct decision to stay at Crystal Palace because we've got a young team on the verge of doing something and I'd like to fulfil my work there."
Oliver Bierhoff, who was reported to have asked Blackburn Rovers for pounds 32,000 a week wage before considering a pounds 4m move from Italy to Ewood Park, was quoted last night as saying he intends to honour his contract with Udinese. The striker, who has also attracted interest from Parma, scored twice for Germany in the final of Euro 96.
Ian Rush, who declined to sit on the bench during last month's 6-0 win over San Marino after being told that he would not be in the starting line-up, has failed to win a recall to the Wales side that plays the Netherlands in a World Cup qualifier in Cardiff on 5 October.
The manager, Bobby Gould, said: "I have seen Ian play twice recently and I won't say his international career is over. He is working very hard, but Dean Saunders and Mark Hughes were outstanding against San Marino and John Hartson has done very well. I thought to myself, 'why change?'
"Frankly, the whole Rush business has been going on for a year and I am getting bored with it."
Gould has recalled the Birmingham City pair, Andy Legg and Jason Bowen, and Everton's Gary Speed seems the most likely to replace the suspended Ryan Giggs.
Chelsea yesterday signed Norway's first choice international goalkeeper Forde Grodas on loan from Lillestrom until the end of the year. Ruud Gullit's side are in need of cover because Dimitri Kharin has a knee injury.
WALES SQUAD (v Netherlands, World Cup qualifying Group Seven, Cardiff, 5 October) Southall (Everton), Marriott (Wrexham), M Bowen (West Ham), Jenkins (Huddersfield), Coleman (Blackburn), Symons (Man City), Melville (Sunderland), Browning (Bristol Rovers), Pembridge (Sheff Wed), Legg (Birmingham), Horne (Birmingham), Robinson (Charlton), Saunders (Nottm Forest), Hughes (Chelsea), Speed (Everton), Savage (Crewe), Taylor (Sheff Utd), Hartson (Arsenal), J Bowen (Birmingham C), Brace (Wrexham), Phillips (Wrexham).Reuse content