Premier League City, owned by Abu Dhabi's Sheikh Mansour, have now lost almost 150 million pounds over the past two years as they spent heavily on building a team to compete with Europe's top clubs.
Although City's finances are heading in the right direction, UEFA's Financial Fair Play (FFP) rules cap headline losses at 45 million euros ($61.5 million) in the two seasons between 2011 and 2013. Clubs who do not comply could be excluded from the Champions League.
Releasing their annual report for 2012-13, City made no direct reference to whether they would be able to meet the FFP rules.
"Growing revenues and controlled expenses are bringing the club to break-even in the immediate future and profitability thereafter," City chief executive Ferran Soriano said.
There are a series of exemptions for older contracts and money spent on things such as youth development that will cut e City's deficit under the rules set out by UEFA, European soccer's governing body.
Lawyer Daniel Geey of Field Fisher Waterhouse said that it was wrong to rush to judgment based on figures released by the club at this point.
"These are just the headline numbers and there are lots of reliefs that would apply to all clubs including City."
Geey also said it was not clear how hard UEFA would come down on clubs when it makes judgments on their accounts in the next few months.
"If City are over the 45 million euro level, it's not a foregone conclusion they will be banned from the Champions League. There are lots of other disciplinary measures on the table for UEFA to use."
City said revenues rose to a record high of 271 million pounds in 2012-13, a season in which they finished runners-up in both the Premier League and FA Cup. Their sponsors include Abu Dhabi's Etihad Airlines.
That income pushed City up to sixth place in the Football Money League of the world's wealthiest clubs compiled by Deloitte. However, total wage and related costs of 233 million pounds ate up much of the revenue.
City are pushing to regain the Premier League title they won in May 2012 and are still in contention in the two domestic cups and the Champions League.
(Writing by Keith Weir; editing by Ed Osmond)
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