Steve Bruce has been confirmed as the manager of Newcastle United, though the club and his former employers, Sheffield Wednesday, are locked in a legal dispute regarding compensation.

After Bruce was announced by Newcastle on a three-year contract, Wednesday expressed disappointment at the move because of “outstanding legal issues” and stated that they were consulting lawyers. It is understood no agreement has been reached over a financial settlement for the 58-year-old, who resigned from the Championship club on Monday.

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A statement from Sheffield Wednesday said: “The club is disappointed to learn via public statement issued by Newcastle United that it has appointed former Sheffield Wednesday staff Steve Bruce, Steve Agnew and Stephen Clemence. Regardless of the fact that the staff resigned from their positions, there remains outstanding legal issues to be resolved between the club and the staff and Newcastle United. The club is currently considering its position and taking the appropriate legal advice.”

Bruce, who replaces Rafael Benítez, has been told he can buy players, yet the level of finance Mike Ashley affords may be modest given the owner’s track record. There have been no additions in the current transfer window, during which Joselu’s £2.5m move to Alavés this week has left Dwight Gayle and Yoshinori Muto as the club’s only frontline strikers. This month Ayoze Pérez was also sold to Leicester for £30m and Mohamed Diamé left on a free. Salomón Rondón is no longer at the club after his loan from West Brom expired.

Bruce also faces resistance from fans underwhelmed at him succeeding Benítez and taking his first Premier League post since since he took Hull City down to the Championship and then back up again four years ago.

Bruce said: “I’m delighted and incredibly proud to be appointed as head coach of Newcastle United. This is my boyhood club and it was my dad’s club, so this is a very special moment for me and my family. We’ll roll our sleeves up and we’ll be giving it everything from the off to ensure supporters have a successful team that they can be proud of.”

Lee Charnley, Newcastle’s managing director, said: “Steve has a deep affection for Newcastle United and we are very pleased that a coach with his vast experience and connections to the club and city has joined us. Steve knows what this club means to supporters and to the region and he will put his heart and soul into leading our talented group of players with the full support of our staff.”

Quick guide Steve Bruce: crossing the divide Show Hide Steve Bruce completed an unlikely treble when he accepted Newcastle's offer of employment. The 58-year-old has now managed three sets of derby rivals – Sheffield United and Sheffield Wednesday, Birmingham and Aston Villa and Sunderland and the Magpies. Sheffield: As his playing career drew to a close, Bruce was appointed player-manager at United in July 1998 and won 22 of the 55 matches for which he was in charge. He did not manage the club against City rivals Wednesday, by whom he was recruited in February this year. He presided over one Steel City derby as Owls boss, a 0-0 Championship draw at Hillsborough on 4 March. Birmingham: Bruce took charge at City in December 2001 and was at the helm for almost six years, taking the club up to the Premier League, but ultimately back down into the Championship. He won four and drew two of his first six derbies, but lost the last three and a 2-1 home defeat by Villa on 11 November 2007 proved to be his last game. He took over at Villa Park in October 2016, but was sacked two years later after a run of nine league games which brought just one victory and left the club well off the Championship promotion pace. He did, however, boast a derby record of two wins and two draws. North-east: Sunderland called on Bruce in June 2009 and he did not disappoint. He guided the club to a 13th-placed Premier League finish at the end of his first campaign and 10th 12 months later, the club's best return since the Peter Reid era. His only visit to St James' Park famously ended in a 5-1 victory for Newcastle, while the Magpies followed up a 1-1 draw at the Stadium of Light later that season with a 1-0 win. Press Association Photograph: Graham Stuart/AFP

Yet some fans cited Bruce’s arrival as the latest misstep by Ashley, with whom their relationship is fractured.

A joint statement from nine Newcastle supporters’ groups said: “Steve Bruce is an unambitious appointment by an unambitious owner. To go from a world-class manager in Rafa Benítez, who brought stability and unity to the club, to Steve Bruce in the space of six weeks is beyond disappointing.

“In Bruce, Mike Ashley has opted for a manager who has been relegated from the league [twice] – he isn’t even a safe pair of hands. Bruce’s appointment is testament to Ashley’s mismanagement of Newcastle United for over 10 years and it’s time for him to sell the club to a party that genuinely wants to take the club forward.”

The disaffection is underlined by thousands of season tickets remaining unsold and a plan to boycott the opening Premier League fixture of the season, at home to Arsenal on 11 August.

Joe Halliday from the Empty for Ashley Group told the Guardian: “We genuinely believe that the amount of people planning to boycott the Arsenal game – if not St James’ Park entirely this season – could be in the thousands.”

A protest also went ahead outside Ashley’s Sports Direct store in Newcastle on Wednesday evening. Bruce, Agnew and Clemence are due to travel to China, where the club lost 4-0 to Wolves on Wednesday and play a second game on Saturday.



