In the first category come the former Liverpool managers Graeme Souness and Kenny Dalglish, now with Benfica and between jobs respectively, plus David Platt, the former Aston Villa and England captain, and Ron Atkinson, who was a groundstaff boy in Wolves' golden era of the 1950s. The second includes the Wolverhampton-born John Rudge, who has vast experience with Port Vale, and John Ward, sacked by Bristol City last month but with a strong reputation locally from his time as coach at Villa Park.
McGhee's No 2, the former Tottenham player Colin Lee, will act as caretaker manager and is keen to step up on a "permanent" basis. The nature of the appointment will hinge on whether Wolves' owner-chairman, Sir Jack Hayward, is ready to bankroll a fresh round of big-money buys or intends to persevere with the policy of making his manager generate funds by selling.
Souness, Dalglish and Atkinson are all renowned as free spenders. In contrast, Rudge's achievements have come on a tight budget, while Ward's principal talent is as a coach. Platt is assisting Howard Wilkinson in the England youth set-up with a view to entering management.
Wolves acted in the wake of Tuesday's 2-0 defeat at Ipswich, which left them with two wins in 14 games. John Richards, the managing director, said: "No one takes any pleasure from this decision and no one has been lined up for the job. The post will be advertised."
Richards added: "I spoke to Mark on Wednesday and other board members were contacted by phone. We agreed it was in the club's best interests to make this decision. Mark fully understood the position and the meeting ended amicably."
McGhee's exit is unlikely to be mourned by Wolves' supporters, impatient after being stuck at First Division level for nine years. Charles Ross, editor of the fanzine A Load of Bull, said: "For the past 18 months it's been his team, playing his way. It's just that no one knows what his way is."
Wolves' decision may induce wry smiles at Leicester. They strove to prevent McGhee from emulating Brian Little's defection of a year earlier. In the event, his resignation paved the way for Martin O'Neill and the most successful era in their history.
McGhee, 41, came to prominence as a striker in the Aberdeen side which Alex Ferguson led to the Cup-Winners' Cup in 1982. He also played for Hamburg, Newcastle, Celtic and Scotland, and continued to turn out after entering management with Reading.
Wolves stood 20th when he took over from Graham Taylor in December 1995 and finished in the same position. The following year he led them to the play-offs, in which they lost to Crystal Palace.
Last season Wolves slipped to ninth but put Leeds and Wimbledon out of the FA Cup before succumbing 1-0 to Arsenal in the semi-final. McGhee bought himself breathing space by blooding a 17-year-old prodigy, Robbie Keane, alongside the cult hero Steve Bull up front.
Keane soon graduated to the Republic of Ireland side. But even with the transfer kitty almost empty, McGhee resisted selling the pounds 5m-rated Dubliner. Hopes rose when the campaign opened with four victories. Defeat by the then-bottom club, Port Vale, started the rot. The board's patience finally snapped after a home draw with Barnsley and the defeat at Ipswich.
Critics pointed to the fact that he played three different formations in his final four matches. McGhee, meanwhile, found it hard to find value for money with the pounds 2m Wolves received from Coventry for Steve Froggatt. He was also dogged to the end by injuries, the names of Keane and Bull on the current casualty list.