However, the 66-year-old, who was in charge of Tottenham Hotspur at the time, believes that the main stumbling block for the FA was the amount of compensation that Spurs chairman Daniel Levy would have demanded.
"I'm sure the FA would deny they were interested in me anyway, they always like to say they got their number one choice, but maybe what helped make their minds up was the thought of writing a cheque in the region of £16m to Levy," Redknapp wrote in his autobiography, which is being serialised by the Daily Mail.
"He is known for driving a hard bargain at the best of times; get Daniel on a bad day and I would have ended up more expensive than Capello - and the FA were already getting a lot of criticism over his £6m-a-year salary.
"Of all the reasons doing the rounds for me not becoming England manager, the compensation issue makes most sense."
Redknapp also branded the FA as clueless for their handling of the situation.