* Milner fee would not have been reinvested in squad

* Manager told friends in April he would leave this season

* Appointment of new chief executive reduced his decision-making power

* Lerner unhappy at spending level and wants to rein in costs



EXCLUSIVE By Wayne Veysey | Chief correspondent

Martin O’Neill quit as Aston Villa manager only five days before the start of the season because he feels he has not been given the funds this summer to challenge for honours,can reveal.

The tipping point for the Northern Irishman came when he was told by Villa owner Randy Lerner that he would not be given any of the proceeds from the sale of James Milner to use in the transfer market.

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It is understood that the £15 million down payment that Villa have agreed with Manchester City for Milner’s services will go straight to the club’s coffers.

Lerner felt that makeweight Stephen Ireland, whose market value has proved the sticking point for the transfer, will suffice as an adequate replacement for the England attacking midfielder.

O’Neill’s relationship with Lerner had become increasingly fraught over the last 12 months as the American tightened the purse strings at Villa Park.

Lerner is believed to have become perplexed that, after being heavily backed in the transfer market in the summers of 2008 and 2009, when the club spent £48.4m and £35m respectively, O’Neill has not been able to make the final push beyond three consecutive top-six placings in the Premier League.

“It has been boiling for a while,” a Villa source said tonight of O’Neill’s departure. “In April, when he had a meeting with Lerner in which he was told he wouldn’t have the same money to spend as in the two previous summers, he told friends that he wasn’t going to be at the club next season.

“O’Neill wants to win trophies, not have to settle for top six. The timing is surprising but he will have known for a while he was leaving.”

The former Celtic manager had also become frustrated that his power at the club had declined over the last 18 months after Paul Faulkner, who has recently been promoted from chief operating officer to chief executive, was given full responsibility for negotiating transfers and contracts.

“For his first few years at the club, O’Neill had an unusually big say in day-to-day business for a modern Premier League manager,” added another source. “His decision-making powers included a role in negotiations and how much players should earn but Lerner wanted checks and balances on his power.”

O'Neill cut an increasingly unhappy and divisive figure at Villa Park last season. He became increasingly tetchy in his dealings with the media and minor disagreements frequently spilled over into rows.

Lerner is understood to have become increasingly disappointed at Villa’s failure to break into the top four. There have been question marks at boardroom level over why O’Neill did not utilise his full squad after their form fell away in the final months of the season in two consecutive years.

“There were four players on the bench earning £40,000-a-week – Steve Sidwell, Habib Beye, Luke Young and Nicky Shorey,” explained the second source. “Lerner gave O’Neill the money to buy players but felt he didn’t use them. Over the last two seasons, it came to March and they were twice within a short distance of the top four but the manager didn’t freshen things up.”

Although there is no indication that Lerner wants to sell the club, sources close to the American say he wants to rein in his spending for 12-18 months.

Since O’Neill took over at Villa in 2006, the Midlands club have the third biggest net spend on transfers – averaging £16.5m per season – behind only Manchester City and Tottenham.