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"I was approached by other clubs during my sabbatical but I saw this as a chance to do something," said Royle, who left Manchester City in May 2001.
"It is a club with a great reputation for sportsmanship and a chance to be successful.
"I will approach the job in stages, getting away from the bottom, the play-off places and then who knows?"
"There is plenty of ability in there. When a side is losing confidence can become strained but I have not seen any sign that that has happened here."
Royle has been made aware that he will have to generate funds for any new arrivals by selling players.