City are expected to appeal after being hit with a shock £215,000 compensation bill from FIFA for Mark Stewart.
They have ten days to decide whether to fight the decision, which was announced today. Otherwise they must pay Stewart’s former side Falkirk 250,000 Euros within a month.
Director of operations David Baldwin said: “We’ve received confirmation of the ruling. We are now in discussions with our lawyers before deciding what position we will take.”
City have constantly maintained that they did not owe the Scottish club anything for the striker, who signed on a free transfer but failed to score in 15 appearances in England last season.
But Falkirk claimed they were owed investment costs after bringing Stewart up through their academy and took the case to football’s governing body 11 months ago.
The dispute centred on when the different seasons end in the two countries. City claimed that as Stewart had just turned 23 when he joined them in the summer of 2011, they were no longer eligible to pay for his development.
Stewart was signed by Peter Jackson on the recommendation of the club’s former head of development Archie Christie. But his only goal was in a penalty shoot-out at Huddersfield.
He broke his foot early on and never managed to secure a regular spot once Phil Parkinson took over.
Stewart returned to Scotland on loan with Hamilton before joining Dundee this season.
Falkirk chairman Martin Ritchie said: “We’ve always believe we had a strong case but it’s taken a lot of hard work from people in and around the club to get this result.
“And of course financially it’s a tremendous boost.”
Should City be forced to cough up, the loss will be minimised by the money raised from reaching the Capital One Cup final.
They are also receiving regular add-ons from Premier League clubs for the development of former home-grown youngsters such as Andre Wisdom and George Green.