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In 2002 Penney hung up his boots to pursue a career in management and he remained at Doncaster taking the managerial job on a full-time basis.
After a well-placed finish in his first season, Penney guided Doncaster back into the Football League with victory in the play-off final in the 2002 – 03 season.
Their stay in Division Three wasn't long though as he managed Doncaster to the Division Three title.
During a further two seasons of cementing Doncaster's place in Coca-Cola League One Penney famously masterminded victories over Premier League sides Manchester City and Aston Villa, and nearly overcame Arsenal in the Carling Cup quarter-finals before finally being beaten in a penalty shootout.
Penney left Rovers on 30 August 2006 as he felt he had taken the club as far as he could.

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