• Former Leicester manager signs three-year deal
• Craig Shakespeare and Steve Walsh join Hull as coaches

Hull City have confirmed the appointment of Nigel Pearson as their new manager.

Pearson, 46, who steered Leicester City to the play-offs in the Championship last season, has signed a three-year contract at the KC Stadium and will start work as Iain Dowie’s successor immediately.

Dowie took the job on a temporary basis in place of Phil Brown, who was placed on gardening leave midway through last season and was subsequently dismissed following the club’s relegation from the Premier League.

Hull’s head of football operations, Adam Pearson, said: “We are delighted to welcome a manager of Nigel’s experience and calibre to the club. We feel it’s a real coup for Hull City and that Nigel is the best man to mould the existing squad into a competitive Championship team.

“Nigel had two outstanding seasons at Leicester City and I feel sure this experience and winning formula will ensure the very best chance of bringing success back to the club.”

The Tigers have also appointed Craig Shakespeare and Steve Walsh as coaches. The pair were Pearson’s assistant and first-team coach respectively at Leicester, who bounced straight back to the Championship in 2009 as League One champions under their leadership.

The Leicester chairman Milan Mandaric said in a statement: “We were greatly surprised to receive the initial approach from Hull.

“The past few years have been a turbulent time for both me and the supporters at Leicester City. We have been striving to get a degree of continuity at the club. However, Nigel has done a fantastic job for us and it would have been wrong of us to deny him the opportunity to speak to another club if he wished.

“After speaking to him, we have reluctantly agreed that if he wished to pursue this opportunity at Hull, we would permit it. I am deeply grateful to Nigel for everything he has done for the club. He has put together the foundations of a strong squad and it is now up to us to find a manager to build on those foundations.”

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• Former Portsmouth manager Paul Hart on Hull shortlist
• No appointment until Phil Brown’s severance deal is done

Paul Hart has emerged as a leading contender to become Hull City’s new manager. The experienced 57-year-old, who has had stints in charge of Portsmouth and Crystal Palace, has held talks with Adam Pearson, Hull’s former chairman who is now head of football operations.

However no appointment will be made until a severance deal is agreed with the outgoing Phil Brown.

Gary Speed, currently assisting Kevin Blackwell at Sheffield United, is another name on Hull’s shortlist but is understood to be unsure about accepting the challenge.

Iain Dowie, who stepped in when Brown was placed on gardening leave in March but failed to prevent the club being relegated from the Premier League, wants the job but is now considered an outside candidate.

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• The £45,000-a-week player is not seeking a move
• Club owes £35m and wants to reduce player wage bill

Hull City’s already slim hopes of offloading Jimmy Bullard this summer received a setback today when the midfielder signalled his intention to see out the remaining three years on his £45,000-a-week contract at the KC Stadium.

A source close to Bullard said: “Jimmy is not seeking a move at all, he is happy to stay at Hull.” Selling the injury-prone former Wigan and Fulham playmaker was always going to be tricky as Hull bought him from Fulham for £5m 15 months ago despite Bullard failing a medical.

Paul Duffen, the former chairman at the KC Stadium, subsequently admitted that the club had been unable to take out insurance on their record signing as Bullard’s knees were uninsurable.

Realistically, the only way anyone might be tempted to recruit him would be on a pay-as-you-play basis but the fragile kneed 31-year-old is not prepared to exchange a basic £45,000-a-week – and with assorted add-ons that remuneration rises to around £50,000 – for such insecurity.

Hull, who have commissioned an independent audit of their finances, are £35m in debt, in effect relegated from the Premier League and trying to stave off the threat of administration or the need to enter a Company Voluntary Arrangement. With the atmosphere between the club’s owner Russell Bartlett and the chairman Adam Pearson extremely tense, it is not impossible Pearson could resign. For the moment, he is working to reduce the player wage bill from £40m a year to £15m while also helping restructure the debt by re-negotiating loans with various creditors.

It helps that, due to high earners including George Boateng being out of contract this summer and a series of loan deals involving players such as Jozy Altidore ending, natural wastage means the wage bill is expected to drop significantly by July. Although the club intends to make a announcement regarding their future direction at the end of this week the next two months will be critical in averting administration or a CVA and the attendant deduction of 10 points by the Football League.

Much depends on whether Hull can meet an outstanding £4m plus tax debt to HM Revenue and Customs. It would help if they could swiftly sell the midfielder Stephen Hunt. He is valued at around £5m but is recovering from a broken foot and will not be fit again until August, thereby missing pre-season training at a new club. This makes him less attractive to potential suitors and, apart form delaying any deal, may force his price down.

Even so Bartlett’s biggest current worry will be the potential loss of an increasingly disillusioned Pearson. Acknowledged as one of the brightest financial brains in football Pearson was brought back to the club he rescued from extinction in 2001 and sold to Bartlett in 2007, last winter in the wake of Duffen’s abrupt departure following an auditor’s warning from Hull’s accountants Deloitte.

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