The Etihad Stadium club are likely to have their squad for next season’s Champions League limited to 21 players instead of the usual 25, and they are also set to be fined €60million (£49million).
City are appealing the UEFA ruling.
The reduction in the size of the Champions League squad to 21 would potentially hit the club hardest, and City would also have to ensure there are still eight locally-trained players in that A squad.
It is understood that the sanctions are very similar to those being handed out to Paris Saint Germain - the two clubs are among nine European sides being dealt with by UEFA's club financial control board (CFCB) for FFP breaches.
City have until the end of the week to reach an agreement with UEFA over the sanctions, but it is understood they are the club furthest away from reaching any final settlement.
If no agreement is reached City face the prospect of the case being handed to a panel for a non-negotiable decision.
Neither City nor UEFA would comment but it is understood the Manchester club have been negotiating forcefully for a significant reduction in the sanctions, but have been struggling to make progress.
The risk, however, is if they are unable to agree a deal with UEFA then they could face even stiffer sanctions from the CFCB's adjudicatory panel.
Who are the other clubs facing penalties

Where does the money go

'If no agreement is reached City face the prospect of the case being handed to a panel for a non-negotiable decision' - enuff said

