MELBOURNE has confirmed the immediate sacking of coach Dean Bailey.

Club president Jim Stynes and deputy Don McLardy held a media conference at noon to announce Bailey's demise after almost four seasons at the helm.

Assistant coach Todd Viney, a former Melbourne captain, will coach until the end of the season.

Stynes said the decision to sack Bailey in the wake of the 186-point loss to Geelong on Saturday, the second-biggest in AFL/VFL history, was "really hard because Dean is such a great man and a man of great integrity".

He said Saturday's result had been a reality check that showed how far behind the rest of the competition Melbourne was.

"We need to take stock of where we are going as a club," Stynes said.

A composed Bailey, who spoke to the media after Stynes and McLardy, said the president phoned on Sunday night and told him, "I have got some bad news and I have got some s...t news for you."

Bailey said the huge loss to Geelong was "the straw that broke the camel's back" from the club's perspective and he accepted his reign as coach would be viewed poorly.

He said Collingwood coach Mick Malthouse recently told an AFL Coaches' Association meeting that there was a bullet flying around with each coach's name on it.

"Unfortunately I got hit last night."

Bailey said he believed until his dismissal that Melbourne, 11th on the ladder, one-and-a-half games from eighth place, would make the finals, and said whoever replaced him would inherit "a very exciting group of players".

He noted that if the club was going to seek the best possible candidates as coach "they are going to have deep pockets".

Bailey also said he had no hesitation in making decisions in his first two seasons as coach that delivered high draft picks to the Demons.

Melbourne finished last in both 2008 and 2009, with three and four wins respectively. As a result, the Demons gained No.1 NAB AFL Draft picks in both seasons - Jack Watts and Tom Scully - as well as Jack Trengove.

Earlier Stynes said he would speak to club legend Garry Lyon in the coming days about how the former skipper could "stand up" for the Demons.

Stynes described Viney as "a legend of this club" but confirmed he had only been appointed for the remainder of the season, which, remarkably, could still involve finals.

"From now we will be put into place a framework and we will look to find the best possible coach we can," he said.

While Bailey has been relieved of his position, McLardy used the media conference to announce that Schwab has been given a one-year extension to his contract as CEO.