Guus Hiddink has told friends that he will not be joining Chelsea in any capacity this summer, which means the 33-year-old Andre Villas-Boas will have sole control of the club as its new manager.
Hiddink has indicated that he will now be staying with Turkey until the end of their Euro 2012 qualification campaign and possibly beyond to the tournament next summer, ruling him out of any potential director of football role. The club had originally turned to Villas-Boas as a coach to work under Hiddink but were so impressed by the Porto manager that they decided to offer him an all-encompassing manager's job.
An announcement on Villas-Boas, who worked at Chelsea under Jose Mourinho as an opposition scout, is expected in the next few days by Chelsea. It is a remarkable turnaround in the appointment of Carlo Ancelotti's successor, with the club's owner, Roman Abramovich, previously having intended to appoint Hiddink.
It emerged yesterday Chelsea will have to pay around £13.2m compensation to Porto for Villas-Boas, a huge sum for a manager. The club are also expected to sign Porto's Colombian striker Radamel Falcao, who has a £26m buyout clause in his contract – a move that is likely to infuriate the Porto president, Jorge Pinto da Costa further.
Appointing a manager with only one full season under his belt is a huge step – even though Villas-Boas achieved great success in his debut year with Porto. He won the Portuguese title going through the season unbeaten, picked up the two domestic trophies and also the Europa League with a win percentage of 84 per cent. His only other managerial job was eight months in charge at Academica de Coimbra.
The Russian oligarch is believed to be the driving force behind appointing Mourinho's protégé as Chelsea's sixth manager in four years. While it is understood he is ready to meet the buyout clause in Villas-Boas' contract, Chelsea are trying to pay less. Villas-Boas informed Porto yesterday of his intention to leave and was last night at home waiting for the deal to be completed.
The Portuguese coach, who wrote famously detailed dossiers on the opposition for Mourinho at Chelsea from 2003 to 2007, has been offered £5m a year on a three-year deal to take over at Stamford Bridge and replace the experienced Ancelotti, who was sacked on the final day of last season.
Provided Abramovich is successful in enticing Villas-Boas away from Porto, it will take the Russian's total spending in compensation to former clubs and sacked managers to £62m.
Porto yesterday issued a statement to the Portuguese stock exchange that they had not received the £13.2m required to release their manager from his contract. However, it is likely a deal will be reached by the end of the week. A Chelsea spokesman said: "We hope to be able to make an announcement regarding the new manager in the next few days or so."
Hiddink is understood to have been reluctant to take on the day-to-day responsibility of coaching the first team full-time at the age of 64. He wanted to appoint several coaches, allowing him to spend time in the Netherlands, which alarmed the Chelsea board and prompted a closer look at Villas-Boas.
Pinto da Costa yesterday admitted that he would be unable to prevent Villas-Boas from moving to England if his release fee is met. He said: "Villas-Boas has a contract and a clause of €15m [£13.2m]. If someone deposits €15m into our account and he wants to go, we can not do anything."
Sources in Portugal last night claimed that Villas-Boas had been told Chelsea would make funds available for him to take the prolific striker Falcao with him. The 25-year-old striker set a new coring record of 17 goals in 14 games in the Europa League campaign.
Villas-Boas, who at 33 is the same age as Frank Lampard and Didier Drogba, has become the most talked about young coach in world football despite only working as a manager for 20 months at two Portuguese clubs.
Porto are said to be extremely unhappy at the prospect of him leaving, having already brought in four new players – Djalma, Iturbe, Kelvin and Rafael Bracalli – that Villas-Boas identified. Pinto da Costa is also understood to be disgruntled at the timing of Chelsea's approach, as the man he would have wanted to replace Villas-Boas, the former Beira-Mar manager Leonardo Jardim, has just been snapped up by rivals Braga.
During his brief managerial reign, Villas-Boas has been keen to differentiate himself from his mentor Mourinho, saying: "We have different personalities and different views towards the game. I respect Jose, but don't want to be a Mourinho clone. I want to be able to work freely, without worrying what he thinks."
A key difference is that Villas-Boas places a greater emphasis on attacking football than his mentor. His Porto team scored 73 goals in 30 league games last season, and fired in 37 goals on their way to winning the Europa League.
Like Mourinho he has courted controversy in the past, clashing with Liverpool defender Jamie Carragher and former Barcelona manager Frank Rijkaard during his time working under Mourinho at Stamford Bridge.