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City had to pay around £4m (€5m) compensation to Blackburn Rovers to secure the services of Hughes, his assistant Mark Bowen and two other members of his coaching staff.
City are adamant Hughes will make the expense worthwhile. Despite being strongly linked with Portugal coach Luiz Felipe Scolari, the Club insists Hughes was always their first choice.
Chelsea were also believed to be interested in Hughes, so City moved quickly to tie up the Welshman.