NYON: Paris Saint-Germain and Manchester City are both expected to be punished with yet-to-be-defined squad restrictions in the Champions League next season after being adjudged guilty of breaking UEFA’s financial fair play regulations.

The two big spenders can appeal both to the European federation and then to the Court of Arbitration for Sport.

The sanction is expected to be an order to make a cut in the number of players permitted in the A squad, which is normally 25-strong, and to be handed large fines when UEFA’s club financial control board meets later this week when a number of other European clubs will also be dealt with.

The sanctions packages are understood to be part of a settlement offer to the clubs, which they can accept, reject or try to negotiate ahead of the meeting.

Both UEFA and City have refused to comment but it is understood the relevant sanction in the FFP rules set to be applied is: “Restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions.”

The idea of the sanctions is that a restriction in the expenditure on players by both clubs who have breached the rules will help them in their efforts to comply with the limits on losses in future seasons.

Clubs can lose up to 45 million euros (£37million) over the last two years under UEFA’s rules.

City made losses of £97.9million in 2012 and £51.6million last year, but were able to write off some sums spent on facilities, youth development and a number of other items.

Both Abu Dhabi-owned City and PSG have a number of sponsorship deals related to their owners which the CFCB had to determine were of fair market value.

Qatari-owned PSG effectively wiped out its annual losses of 130 million euros (£107.4million) by announcing a back-dated sponsorship deal with the Qatar Tourism Authority worth up to 200 million euros a year.

According to French newspaper La Parisien, the CFCB determined that PSG’s sponsorship deal with the tourism authority should have a fair market value of half its current price.

No other English club has been deemed to have breached the FFP rules, and UEFA president Michel Platini said last week he did not think any of the clubs – understood to number fewer than 20 – who breached rules will be banned from European competition next season.

All sanctions are expected to be confirmed by UEFA’s FFP adjudicatory body next week.