Senior figures within English football are raising the alarm over a potentially extraordinary scenario: Manchester City playing in the Champions League next season even if they are relegated from the Premier League as a consequence of their financial regulations breach.

An independent commission has found City guilty of inflating sponsorship revenue by £830m through sham contracts, along with hiding additional expenses worth £90m. Without those manipulations, the commission concluded, City would have failed profit and sustainability rules across all nine seasons between 2009-10 and 2017-18. The club continue to deny any wrongdoing and last week lodged a formal appeal against the verdict.

The Loophole That Is Causing Concern

The crux of the issue is straightforward: there is no automatic mechanism to remove a club from a European competition they qualify for on sporting merit. Should City lift the Champions League this season, they would earn a place in next year's competition as title holders — irrespective of their domestic standing. BBC Sport understands that multiple senior figures have flagged this in recent days, with the consensus being that it would be wholly unacceptable for a club handed severe sanctions to simultaneously collect the financial rewards that come with European elite football.

It is not solely the Champions League that is in play. A run to the FA Cup final or Carabao Cup glory — City face Brighton in the fourth round on 28 October — would secure Europa League or Conference League qualification respectively, creating further complications.

The Licensing Problem Has No Easy Fix

Every club must hold a Uefa licence to compete in European competition, with the Football Association issuing those licences via a process delegated to the Premier League. The difficulty, as sources have outlined to BBC Sport, is that licences are assessed on current financial performance. Historical breaches and forthcoming sanctions do not factor into the process. If a club meets the minimum criteria — relating primarily to overdue payables and outstanding tax liabilities — the licence cannot be refused. Grounds for denial in City's specific situation remain, as one source put it, "unclear".

Another source acknowledged that the licence question "had been raised" but warned a solution would require "the sort of joined-up thinking that's been a bit lacking so far".

Sanctioning Timeline Adds Further Uncertainty

Complicating matters further is the timeline around punishment. The sanctioning hearing — which will determine what City actually face in terms of points deductions, fines, or transfer embargoes — has not yet been scheduled. The Premier League introduced new clauses last summer intended to set time frames for disciplinary processes and appeals, which could mean a judgement on the sanction arrives no later than January. However, there is no confirmation those clauses apply to the City case, meaning the entire process may well run beyond the end of the current season.

Uefa, for its part, cannot take action while the Premier League's own proceedings are ongoing. It is understood, however, that potential scenarios are being discussed internally by the Uefa administration and the club financial control body. The Premier League case also found City guilty of five separate breaches of Uefa's own profit and sustainability regulations, giving European football's governing body additional standing to consider its position once the domestic process concludes.

What Happens Next

City's appeal against the guilty verdict is now lodged. If that appeal fails, sanctions are expected to be severe — heavy points deductions, significant fines, and transfer embargoes are all on the table, with expulsion from the Premier League remaining an option. A points deduction could rule City out of qualifying for Europe via league position, but qualification through cup competitions would remain a live possibility.

The noises out of senior circles suggest the issue is live and urgent. Whether the relevant authorities can piece together a coherent, legally sound response before the end of the season is the question nobody yet has a clean answer to.

Frequently asked

Could Man City still play in the Champions League if they are relegated?
Yes, potentially. If Manchester City win the Champions League this season, they would qualify as title holders regardless of their domestic status. There is currently no automatic mechanism to remove a club from a European competition earned on sporting merit.
Why can't Man City just be denied a Uefa licence?
Uefa licences are issued based on a club's current financial performance and specific criteria such as overdue payables or outstanding tax liabilities. Historical breaches and pending sanctions do not automatically disqualify a club, which is why senior figures say the grounds for refusal in City's case are unclear.
When will Man City find out their punishment for the financial regulations breach?
The sanctioning hearing has not yet been scheduled. New Premier League rules may require a judgement by January, but it is unconfirmed whether those rules apply to this particular case, meaning the process could extend beyond the end of the current season.