Chelsea, United and Arsenal to profit as City and PSG face FFP cuts #CarryGobySeanKellz #FutureGroupNG via @myentertain9jar

UEFA are expected to impose financial restrictions on the squads of Manchester City and Paris Saint-Germain next season - which will be music to the ears of Chelsea and Manchester United.

Manchester City's recent spending is set to be punished by UEFA[GETTY]

City and PSG are set to be hit with financial barriers for their squads in next season's Champions League after breaching UEFA's spending rules.

And while neither side is due to be kicked out of the 2014/15 competition, the knock-on affects could prove damaging.

The Gulf-owned clubs will suffer squad restrictions and hefty fines though, while the penalties will force them to alter their summer transfer plans.

City are in advanced negotiations for Porto duo Eliaquim Mangala and Fernando, while they also want Arsenal defender Bacary Sagna.

City and United want Porto's Eliaquim Mangala [GETTY]

However, with potential salary caps and squad cuts on the horizon, the Citizens may be forced to shelve such plans.

That would boost rivals Manchester United, who are also interested in Mangala. And Arsenal, who want to tie Sagna down to a new deal.

Chelsea will benefit from the shackles being placed on PSG too, with their reported interest in Eden Hazard and Oscar set to dwindle.

Such moves for either Blues star would be extremely pricey, and are unlikely to be made this summer given the financial microscope now fixed on the Parisian outfit.

Chelsea pair Oscar and Eden Hazard are reported targets for PSG [GETTY]

The penalties facing City and PSG for breaking FFP rules would see both clubs effectively given a limit on the salary bill of their European A squad.

The oil-rich European pair are also expected to be ordered to make a cut in the number of players permitted in their A squads - normally 25-strong - and to be handed large fines when UEFA's club financial control board (CFCB) meets on Thursday and Friday.

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.

Manuel Pellegrini could face restrictions on his squad next season [AP]

Clubs can lose up to £37million over the last two years under UEFA's rules.

City made losses of £97.9m in 2012 and £51.6m 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 Qatari-backed PSG have a number of sponsorship deals related to their owners which the CFCB had to determine were of fair market value.

PSG effectively wiped out its annual losses of £107.4m by announcing a back-dated sponsorship deal with the Qatar Tourism Authority.

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 who breached the rules will be banned from European competition next season.

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