UEFA has opened a formal investigation into Premier League champions Manchester City over potential breaches of its break-even rule known as Financial Fair Play (FFP), European soccer's ruling body said on Thursday.
German publication Der Spiegel reported in November that City’s Abu Dhabi owners inflated sponsorship agreements in order to comply with FFP requirements.
In response, City said information had been "hacked" and that they were victims of an "organised and clear" attempt to damage the club’s reputation.
"The investigation will focus on several alleged violations of FFP that were recently made public in various media outlets," UEFA said in a statement.
Der Spiegel’s report, based on documents received by the whistle blower platform Football Leaks and reviewed by Reuters, alleged that some of City’s Abu Dhabi sponsorships were three times more lucrative than independent experts deemed they were worth.
UEFA said following the publication that it could re-open investigations on a case-by-case basis.
The FFP rules are intended to prevent clubs receiving unlimited amounts of money through inflated sponsorship deals with organisations related to the owners.
Clubs can be barred from European competition if they are found to have breached the rules.
City's response on this occasion was swift and robust, insisting that the allegations were "entirely false" and welcoming the investigation.
A statement on the club's official website, www.mancity.com, said: "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."