"He needed to get out of Manchester," Phelan told BBC Radio 5 live.
"He has gone away from the club now which I think in hindsight is the correct thing to have done.
"It is easy to say we let our most promising player leave but is it worth the hassle to wait and maybe not see fruition to it?
"It is still a risk with Ravel, but he seems to have got his head in the right situation, his performances are decent and getting better. Hopefully he can maintain that.
"At Manchester United there were other things going on which were a distraction for him and that played a part in his downfall."
"He had a tendency to disappear for the odd day or two and then we would manage to find him and bring him back in," he said.
"It really was a day-to-day project with him. One day he was there and then another he wasn't.
"He is a nice guy when he is with you, when he is around football, but obviously there were distractions.
"At the end of the day is it too much work to put into one person and keep the harmony and the balance? That was a decision that the club had to make."
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