Clubs and managers were jockeying for position last night as football's managerial merry-go-round gathered pace. No sooner had Sven-Göran Eriksson walked away with another handsome pay-off after finally being dismissed as Manchester City manager yesterday than the Barclays Premier League club were pressing ahead with plans to appoint Mark Hughes as the Swede's successor.

Despite reluctantly granting City permission to talk to Hughes, Blackburn Rovers will not allow their manager and his trusted backroom staff of Mark Bowen, Eddie Niedzwiecki and Kevin Hitchcock - all of whom have two years remaining on their contracts - to leave on the cheap and are expected to demand at least £5million in compensation for the quartet.

City will open talks with Hughes today or tomorrow - Garry Cook, who was ratified as City's executive chairman yesterday, will lead the negotiations - but with the Blackburn manager also in contention for the vacancy at Stamford Bridge, Hughes is unlikely to commit his future to City until Chelsea's intentions become clearer.

Roman Abramovich, the Chelsea owner, Peter Kenyon, the chief executive, and other figures from the club's hierarchy were meeting last night as the search for a first-team coach to replace Avram Grant, who was sacked ten days ago, intensifies. Although City appear to be in pole position to land Hughes, Chelsea could yet hijack any attempted deal and leave Thaksin Shinawatra, the City owner, to pursue other targets.

Intriguingly, many of the names on the Stamford Bridge shortlist also feature on that of Thaksin, although given Chelsea's loftier status and greater spending power, West London remains the more attractive venue. City have all but conceded defeat in their efforts to lure Luiz Felipe Scolari, the Portugal coach, who, along with Carlo Ancelotti, of AC Milan, and Hughes is in the running to succeed Grant.

Roberto Mancini, who was replaced by José Mourinho, the former Chelsea manager, at Inter Milan yesterday, has his admirers at Stamford Bridge and City. His 17-year-old son, Filippo, joined City's youth academy on loan from Inter in January and Mancini Sr enjoys a cordial relationship with Alistair Mackintosh, the City chief executive.

Although Eriksson was known to be dismayed by his treatment at the hands of Thaksin, the former England head coach may well have reasoned that his protracted departure was worth it. Eriksson, who had two years remaining on his contract, was given a settlement of £1.25million - the equivalent of six months' salary - and will receive another bumper pay-day if, as expected, he is confirmed as the Mexico coach, possibly as early as today.

Blackburn have not given up hope of keeping Hughes, but Sam Allardyce, the former Bolton Wanderers and Newcastle United manager, is known to be keen to take over at Ewood Park.