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Manchester City's ban from European football overturned

Manchester Manchester City's two-year suspension from European football has been overturned, allowing the club to compete in next season's elite Champions League competition.

The Court of Arbitration for Sport ruled on Monday that City did not breach Financial Fair Play (FFP) rules by disguising equity funding as sponsorship.

Manchester City will be able to play in the Champions League after a ban was overturned.

Manchester City will be able to play in the Champions League after a ban was overturned. Credit:AP

Sport's highest court also reduced a fine for failing to cooperate with UEFA from 30 million euros ($A48.8 million) to 10 million euros.

CAS said in a statement that most of the alleged breaches most "were either not established or time-barred".

European soccer's governing body, UEFA, ruled in February that City had committed serious FFP breaches and failed to cooperate with its investigation.

Missing out on the Champions League would have cost City, which has denied any wrongdoing, as much as 100 million pounds ($A180.8 milion) in prize money and broadcast revenue, as well as matchday and other revenues.

The FFP regulations are designed to stop clubs running up big losses through spending on players. They also ensure sponsorship deals are based on their real market value and are genuine commercial agreements - and not ways for owners to pump cash into a club to get around the rules.

Manchester City released a statement welcoming the announcement as a "validation of the club’s position and the body of evidence that it was able to present".

"The club wishes to thank the panel members for their diligence and the due process that they administered," the Premier League club added.

UEFA had said City had committed "serious breaches" of the FFP rule in information submitted to them between 2012 and 2016.

However, Article 37 of UEFA's own procedural rules covering the CFCB states that "prosecution is barred after five years for all breaches of the UEFA Club Licensing and FFP Rules".

UEFA said it remained committed to FFP.

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