McRae left his role with NRL side South Sydney last year
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Football director Steve Simms says new coach Shaun McRae is the man to take Salford into a new era.
McRae takes over with the City Reds three points adrift at the foot of the Super League table.
The club has big plans for the future, with a new 20,000 capacity stadium planned for 2009.
"There is a big future in this club. Shaun is a quality coach and a good signing. I am sure he is the right man for the job, long term," said Simms.
"He was obviously the number-one choice and we are lucky enough to get his services.
"The first obstacle is to stay in Super League and I'm pretty confident we can do that, but it's not just about keeping us up."
Simms took temporary charge when Karl Harrison was sacked, after which Salford beat Huddersfield and lost to champions St Helens by a single point.
"I won one game out of two and I've got the sack. It's getting tougher, this game!" joked Simms.
"But Shaun is quality and it's going to be good. I've known him since the 1980s when he was at Canberra and I was at South Sydney and we're good friends.
"I think we are both similar-type people and know the game as well as each other. We think the game is played the same way and I think it's going to be a pretty good relationship."
McRae coached throughout the first nine seasons of Super League, winning the title with St Helens and then moving on to Gateshead and Hull.
He left Hull at the end of the 2004 season to take over at South Sydney but his tenure with the NRL club ended last year when he was moved upstairs to director of rugby.
He quit that role over the winter and has since taken a break from the game, although he applied unsuccessfully for the Great Britain coaching job earlier this year.