"I am extremely delighted to join this fantastic project and am looking forward to starting work," the former Arsenal defender told a news conference in the Azeri capital.
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"It is my honour to use this opportunity and to bring this club to the highest international standards. We are definitely creating history."
Local media reported Adams would receive an annual salary of one million pounds but the 43-year-old said the figure was much less.
Gabala, founded five years ago in a small town about 200-km north of Baku, are sixth in the league with the last round of matches coming up this weekend.
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