In July 2000 Trapattoni took charge of the Italian national team after the resignation of Dino Zoff. He led the team to the 2002 FIFA World Cup. In that tournament, after winning its first match against Ecuador, Italy's form dropped and they controversially lost to Croatia. They almost lost to Mexico, with Alessandro Del Piero scoring a late equalizer. In the second round, Italy lost to South Korea, in a game that is remembered as being one of the biggest and most controversial upsets in FIFA World Cup history, due to the arbitration by Byron Moreno.
At the 2004 European Championship, Italy once again failed to impress, playing with poor defensive tactics. They drew with both Denmark and Sweden, leading to an unexpected early exit. Somewhat controversially, Sweden and Denmark drew 2-2 in their final group game, both teams knowing that a high scoring draw would eliminate Italy no matter what score the Italians achieved in their final game against Bulgaria. On 25 June 2004, Marcello Lippi was named as Trapattoni's replacement, as his contract ran out on 15 July 2004.
On 5 July,2004 Trapattoni was named as new coach of Lisbon club SL Benfica, which he led to win the Portuguese league for the first time in eleven years, and also to the cup final (which Benfica lost to Vitória F.C.). He resigned after the 2005 season, saying he wanted to be closer to his family (in the north of Italy) but returned to management in the German Bundesliga in the summer of 2005, by signing at VfB Stuttgart, with much hype about his appointment. However, during his 20 games at the helm, VfB produced poor results. Denmark international forwards Jon Dahl Tomasson and Jesper Grønkjær openly criticized their coach, claiming he was afraid to attack. Trapattoni responded by dropping both players to the bench. With the atmosphere in the team worsening, he was sacked after just seven months, on 9 February 2006, reportedly for "not fulfilling the ambitions of the club". He was replaced as manager by Armin Veh.
In May 2006, FC Red Bull Salzburg announced it had signed Trapattoni as its new director of football, along with one of his former players, Lothar Matthäus, as coach. Trapattoni initially cast doubt on this report, claiming he had not signed any contract. But three days later, both he and Matthäus signed and made their hirings official. After their successful season of 2006/07, the club's board of directors unanimously decided to dismiss Matthäus, making Thorsten Fink Trapattoni's new assistant.
Over a club career spanning three decades, Trapattoni won ten league titles, a European Cup, a Cup Winners' Cup, three UEFA Cups, the Super Cup and four national cups (including two Italian Cups).
On 11 February 2008, Trapattoni "agreed in principle" to take over the Irish manager's job,but finished the season with Red Bull before taking up the Irish position on 1 May. Former Ireland midfielder Liam Brady was expected to be part of the Italian's backroom staff,while Marco Tardelli was confirmed as Trapattoni's assistant manager. Trapattoni signed Brady back in 1980 for Juventus from Arsenal for just over £500,000.
Red Bull Salzburg confirmed, on 13 February 2008, that at the end of their 2007/2008 season, Trapattoni would be leaving the club to take over as the Republic of Ireland manager.
Trapattoni's first game in charge, a friendly against Serbia on May 24, 2008, ended in a 1-1 draw. His second, another friendly, against Colombia five days later, meant his first victory with the national side, 1-0. Trapattoni continued his impressive start as Ireland manager with a 1-1 draw with Norway, his first competitive win against Georgia and a draw with Montengro in the World Cup Qualifying Round Group Stage.
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