Chelsea cling to pursuit of Ancelotti in face of denials

Chelsea have not completely given up hope that they could make Carlo Ancelotti their manager this summer even though the Italian announced last night that he was not interested in leaving Milan. Ancelotti was sounded out by the London club this week and, under pressure to clarify his position yesterday, he made an informal announcement at the Milan training ground that he would not be leaving.

The Milan coach said that he was "150 per cent" sure he would not be leaving Italy after the betting markets went into a frenzy yesterday over reports that he had provisionally agreed to take the job. The 48-year-old is understood to have had some contact with Chelsea officials on Monday but yesterday baulked at suggestions he would be leaving Italy. However, Chelsea are still exploring possibilities under which they could do a deal – a £6m, four-year contract is the potential offer – and have not ruled Ancelotti out completely.

It followed a day in which the first major managerial changes in the Premier League at least began in earnest. Mark Hughes was granted permission by Blackburn Rovers to negotiate with Manchester City and Jose Mourinho was introduced as the new Internazionale manager. Chelsea are understood to have made a late enquiry into the availability of Hughes but, as of last night, City were confident that they would sign their man once they had agreed personal terms.

Hughes is almost certainly out of the running but Ancelotti remains a target despite what has been said in the last 24 hours. Chelsea know that it will be difficult to take such a major figure away from one of the biggest institutions in European football but have not given up hope. Chelsea are divided by two major factions within the club, both of whom want to seize control of the appointment process: one led by Peter Kenyon, the other by Frank Arnesen. Should the club not be able to agree a deal for Ancelotti then the two camps' battle for influence will become critical. For his part, Ancelotti dismissed the link to Chelsea and said: "I stay at Milan 150 per cent."

The vice-president of Milan, Adriano Galliani, said at the weekend that he had denied Chelsea permission to speak to his manager. Ancelotti has impeccable credentials in the Champions League, the competition Roman Abramovich covets the most, having won it twice as a player and twice as a manager with Milan. Whether he is the type to lead Chelsea to the same trophy with the attacking football that Abramovich craves is more debatable and for that reason the Italian would still be a surprising appointment for the Russian.

Kenyon, the chief executive, was an advocate of Hughes on the basis that he believes Chelsea should be appointing the kind of man who will be the next Manchester United manager. He is also an admirer of Roy Keane who is a major outsider for the job but is not an impossibility. However, Chelsea would have to go a long way down their shortlist before they make the Sunderland manager their prime target.

In the opposing camp is Arnesen, chief scout and director of youth development, who does not enjoy a comfortable relationship with Kenyon. The chief executive feels that the Dane cuts across his areas of responsibility too much. Arnesen would like Frank Rijkaard appointed as the new manager and was behind the move last year to sign Dutch coach Henk ten Cate – who proved an unpopular figure and was sacked last month. Arnesen is also under pressure to produce more young players capable or breaking into the senior team from an academy that is the best resourced in the Premier League.

Luiz Felipe Scolari remains the compromise candidate who will be in line for the job although he has shown himself so far as unwilling to make any decision before Euro 2008 is over. Roberto Mancini, who has consistently had the shortest of odds, is not thought to be highly regarded by the club's hierarchy. Rijkaard is dependent on Arnesen holding sway at the club where it has been suggested that this season will be his last.

Chelsea said in a statement yesterday they had "not reached agreement with any individual to become manager." They added: "Nor have we sought permission from any organisation to talk to their manager. We are extremely happy [with] how our search is progressing."

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