Manchester City could face Champions League ban next season if they are found guilty of financial irregularities, paving way for Arsenal to qualify automatically for the continental championship.

The Premier League champions are subject to allegations the club agreed inflated sponsorship deals to allow the Abu Dhabi royal family put extra money into the club.

They are subject to investigation by a regulatory committee over a series of leaks into their financial conduct.

Sources for the football governing body said the club could be banned from the Champions League if they are found to have broken the rules.

But English clubs will retain their four competition places according to Champions League regulations.

Article 4.08 reads “a club which is not admitted to the competition is replaced by the next best-placed club in the top domestic championship of the same association”.

But Manchester City have hit back over an apparent Uefa leak concerning their investigation for alleged financial fair play breaches.

A statement from City read:

“Manchester City FC is fully co-operating in good faith with the CFCB IC’s (club financial control body investigatory chamber) ongoing investigation.

“In doing so the club is reliant on both the CFCB IC’s independence and commitment to due process; and on UEFA’s commitment of March 7 that it ‘…will make no further comment on the matter while the investigation is ongoing’.

“The New York Times report citing ‘people familiar with the case’ is therefore extremely concerning.

“The implications are that either Manchester City’s good faith in the CFCB IC is misplaced or the CFCB IC process is being misrepresented by individuals intent on damaging the club’s reputation and its commercial interests. Or both.”

“Manchester City’s published accounts are full and complete and a matter of legal and regulatory record. The accusation of financial irregularities are entirely false, and comprehensive proof of this fact has been provided to the CFCB IC.”

A statement from UEFA read:

“We do not comment on ongoing investigations regarding financial fair play matters.”