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Manchester City is facing an investigation over alleged breaches of football’s so-called financial fair play rules, following allegations the English Premier League club went to enormous lengths to mask funding received from its billionaire Abu Dhabi-based owner.

On Thursday, Uefa, European football’s governing body, said it has opened a probe into the English club, which could lead to severe sanctions including a ban from future editions of the Champions League, the most prestigious club football competition on the continent.

The move comes in response to a series of articles dubbed “Football Leaks” published in recent weeks by the European Investigative Collaborations, a network of journalists and media outlets including German magazine Der Spiegel.

The EIC has relied on leaked documents and internal communications at Manchester City to allege that the club artificially inflated the value of sponsorship deals with undeclared additional funding from its owner, Sheikh Mansour bin Zayed al-Nahyan, the billionaire businessman and member of the Abu Dhabi royal family.

The leaks also suggest the company set up a shell company to pay players for “image rights” in an effort to take millions of pounds off its wage bill, as well as a range of other measures to mask the true size of the club’s breach of FFP rules.

In a short statement Uefa said: “The investigation will focus on several alleged violations of FFP that were recently made public in various media outlets.”

The club said in a statement on Thursday: “Manchester City welcomes the opening of a formal UEFA investigation as an opportunity to bring to an end the speculation resulting from the illegal hacking and out of context publication of City emails. The accusation of financial irregularities are entirely false. The Club’s published accounts are full and complete and a matter of legal and regulatory record.”

After Sheikh Mansour acquired the club in 2008, he spent hundreds of millions of pounds to acquire world class footballers, turning Manchester City into a contender for England and Europe’s biggest prizes.

But the introduction of FFP rules in 2011 required the club to stop incurring large losses, meaning it had to show Europe’s football regulators that continued player spending was being paid for through revenues gained through commercial activities, rather that from its owner.

In 2014, Manchester City and Uefa reached a settlement over past FFP breaches, with the football club agreeing to pay a £49m fine and restrictions the players that could feature in European competition.

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