But Ray Hinett told Mr Justice Johnson that a City coach had threatened to leave the club if Bennell, who is serving a jail term, got the job.
He said “as a result” the job was given to someone else.
Mr Hinett, 80, of Sandbach, Cheshire was giving evidence at a High Court trial in London, being overseen by Mr Justice Johnson, on Tuesday.
Eight men, now in their 40s and 50s, have made damages claims against Manchester City and say Bennell abused them when they were playing football in the north-west of England more than 30 years ago.
They say Bennell was operating as a Manchester City scout and want damages from the club.
The judge has heard that the eight men were sexually and emotionally abused by Bennell between 1979 and 1985 and are claiming damages after suffering psychiatric injuries.
Six are also claiming damages for loss of potential football earnings.
Manchester City dispute claims made by the men.
Bosses say Bennell had been a local scout in the mid-1970s but was not a scout between 1979 and 1985.
Mr Hinett told the judge, in a written witness statement, that he and Bennell had been among five City scouts in the Manchester area.
He told the hearing that he had a “scout card” said he was aware that “Bennell had one as well”.
Mr Hinett said in around 1979, Bennell had “left for about two years” before “coming back”.
“Bennell had been promised the youth development officer role at Manchester City but Steve Fleet, the youth coach at Manchester City, had complained about Bennell getting the job,” said Mr Hinett.
“I understood that Steve Fleet had threatened that if Bennell got the job, he would leave.
“Steve never told me why he felt this way but as a result of this, the job was given to Ted Davies instead.”
Mr Hinett said Ken Barnes, then City’s chief scout, told him that Bennell was “coming back” and that he “would like him to train the feeder teams again”.
“I remember having this conversation with Ken Barnes and am sure that Bennell returned to the club in around 1981,” said Mr Hinett.
“Bennell was a great coach and because of this, I was happy he was back.”
He added: “I had the impression that Bennell’s opinion was highly valued by Ken Barnes.
“If Bennell suggested a boy was a decent prospect then it was a near certainty that Manchester City would offer associated schoolboy forms to that boy.”
Mr Justice Johnson on Tuesday saw a video, which lawyers say was taken between 1982 and 1984, which showed Bennell talking to boys playing in a game at Manchester City’s training ground.
Bennell had said, in a witness statement, that it “just so happened” he was there, a lawyer representing the eight men told the judge.
Mr Hinett, then a Manchester City scout, said the footage showed Bennell at a schoolboy trial game.
“He’s sorting the teams out,” Mr Hinett told the judge.
“He did it on a regular basis.”
Mr Hinett said: “Usually it was Barry Bennell who sorted them out.”
He said Bennell probably also played a part in deciding which boys were chosen.
A section from Bennell’s witness statement was introduced into the evidence on Tuesday.
It was quoted in a witness statement, relating to the video of the youth game at City’s training ground, given by Mr Hinett.
The section read: “ I recall one particular occasion when TV cameras even turned up to a training session for some reason.
“At the end of the session a game was arranged and as usual whenever there was a game of football, I ended up getting involved somehow.
“However, on this occasion, I was on the sideline probably shouting instructions or encouragement when Ken Barnes came over and asked me to step in and coach one of the teams that was playing.
“To my amusement, the TV report made me out to be the main coach or head coach when in fact I was just doing Ken a favour on the day.”
The judge has been told that Bennell, who worked as a coach at Crewe Alexandra, is serving a 34-year sentence at Littlehey Prison near Huntingdon, Cambridgeshire, after being convicted of sexual offences against boys on five separate occasions – four in the UK and one in the US.
Bennell is due to give evidence, via video-link from prison, later this month.