Translation:There are a lot of people.
In conversation 사람 많다 might be heard, but to be grammatically correct you need either a subject postposition (이) or a topic postposition (은). 많이 is an adverb, not an adjective, so would not be used to modify a noun. The adjectival form of 많다 is 많은. It would not be incorrect to say,
많은 사람이 있다 (note the addition of the subject postposition), but it is more common to use the adjective at the end the same way verbs are used.
This comment is a year old but for anyone else looking for help with this, here's an article that explains the batchim rules (batchim or 받침 is the final consonant position in a Korean syllable, the third one or bottom one):
About halfway down they explain the double consonant rules.