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Unai Emery turned down Newcastle United because the club wanted to insert a clause in his contract that would see him sacked if they were relegated.
The former Arsenal and Paris Saint-Germain boss looked to be in pole position to replace Steve Bruce after the club's new owners dismissed him shortly after taking over.
The Magpies were reportedly paying £6 million in compensation to Villarreal to secure his services but according to The Mirror, Emery got cold feet because he did not agree to the key clause.
Emery was Newcastle's top target for their managerial vacancy but he was also said to be unhappy with how the story was leaked prior to Villarreal's Champions League group game against Young Boys.
Although grateful for the opportunity to have a second crack at English football, Emery stated his commitment to staying with The Yellow Submarine.
Writing on Instagram, he said: "No matter how much noise there was yesterday in another country there was transparency and loyalty within Villarreal and the Roig family [owners] and their staff.
"That is maximum for me and that is most important for me. Villarreal is my home and I am 100 percent committed to stay here.
"I am honestly grateful to the interest from a great club, but I am even more grateful to be here and that is why I communicated to Fernando Roig my decision to want to continue being part of this project because of the commitment and respect that I perceive from the club and from my players, which is mutual and reciprocal.
"I want to thank the fans for the support they have always shown me.
"On Sunday we have a very important game and I hope that together we can achieve victory. See you at the Estadio de la Cerámica."
Emery's Villarreal beat Young Boys 2-0 on Tuesday and are level on points with Group F leaders Manchester United, who they host in their next European game on 23 November Estadio de la Cerámica.
The Europa League winners haven't got going in La Liga, however, and sit in 13th place after 11 games.
Former Bournemouth boss Eddie Howe is widely expected to be appointed Newcastle's manager.
He's been out of work since resigning from the Cherries at the end of 2019/20 campaign.
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