UEFA announced they have banned Manchester City from Europe for the next two seasons and fined them €30m for Financial Fair Play violations.
UEFA's financial regulations forbid clubs from receiving more than a capped amount of investment from ownership, and this clearly violated those rules.
The reigning Premier League champions have also been fined 30 million euros ($33 million) in an investigation that was sparked by leaks showing City overstated sponsorship revenue.
UEFA's Club Financial Control Body (CFCB) discovered that City falsely inflated their sponsorship revenues.
English Premier League club Manchester City were banned from European competitions for the next two seasons on Friday due to breaches of UEFA's club financial fair play regulations.
"The decision of the Adjudicatory Chamber is subject to appeal to the Court of Arbitration for Sport (Cas)".
City confirmed its plans to pursue a judgment with the Court of Arbitration for Sport "at the earliest opportunity".
"Manchester City is disappointed but not surprised by today's announcement by the UEFA Adjudicatory Chamber".
UEFA's FFP rules are meant to prevent clubs receiving unlimited amounts of money through inflated sponsorship deals with organisations related to the owners. Pep Guardiola pursuit of winning the Champions League will rest on this season alone while many players may not want to stay without having top European football. The club itself, with annual revenue in the past year of $635m, according to Deloitte, is the fifth-richest football club in the world.
"The adjudicatory chamber has also found that in breach of the regulations, the club failed to cooperate in the investigation of this case".
City have denied wrongdoing throughout the process and swiftly stated their intention to appeal the verdict, accusing UEFA of a lack of impartiality in a strongly worded statement. Clubs are only allowed to spend on their squads in relation to the amount of income received from sponsors, in a bid to ensure a relatively even playing field.
The Guardian report that club owner Sheikh Mansour was alleged to have been funding the £67.5m deal with Etihad to sponsor City's stadium and kits, and further leaks suggested only £8m from that sponsorship in the 2015-16 financial year came directly from the airline. Manchester City has strongly denied the allegations.
The club appointed decorated Spaniard manager Pep Guardiola in 2016 and while he has delivered Premier League titles, he has yet to add the sought-after Champions League title to the Manchester team's trophy cabinet. Speculation has already mounted as to his future career direction if Manchester City are prevented from competing in the competition.