Melbourne City vice-chairman Simon Pearce (second from right) is on the board of Manchester City, which is being investigated by UEFA. Credit:TTG Asia

The vice-chairman of Melbourne City may be drawn into a UEFA investigation into the A-League team's parent club, Manchester City, after the European governing body announced a probe into an alleged plot to subvert rules on club spending.

UEFA announced its investigation into the English Premier League club's finances on Friday, with the official probe following an investigation from German magazine Der Spiegel last November which alleged the club planned to manipulate sponsorship agreements to side-step UEFA's stringent Financial Fair Play regulations. If found guilty, Manchester City risk being banned from European competition.

Der Spiegel identified Simon Pearce, Melbourne City's vice-chairman, as playing a significant role in the alleged plot to use extensive business networks in Abu Dhabi to boost Manchester City's revenue with inflated sponsorship deals to avoid sanctions from European football's governing body, while also looking to off-set player image rights payments.

A Portuguese national has been arrested in Budapest over the alleged data breach and could extradited to Portugal.