Manchester City have swooped for a second summer running for a big-priced defender, signing Argentina’s Nicolas Otamendi from Valencia for a fee of £32million on a five-year deal - a year after buying Eliaquim Mangala for £42m from Porto and two third-party ownership groups.

The signing of Otamendi brings City’s summer outlay close to £100m, with the club still being strongly linked to a £50m deal for Wolfsburg's Kevin De Bruyne.

Nick Harris explores whether UEFA have given up on Financial Fair Play and trying to keep spending down - or whether there is another explanation for the splurge.

Manchester City announced the arrival of Nicolas Otamendi from Valencia for £32m on Thursday

Q: How come City can splash out £150m and maybe more on new players, little more than a year after being hit with a UEFA fine and other punishments for breaching FFP?

A: They can’t. They haven’t. They won’t. First of all, the numbers need to be put into perspective in terms of net spending, not gross spending, because if City are bringing in cash from sales and loans, they’re not spending as much net.

With Raheem Sterling (£49m maximum), Fabian Delph (£8m), Patrick Roberts (£8m maximum), Enes Unal (£2m) and Otamendi (£32m), that’s £99m spent so far, some of that contingent on future events. If De Bruyne arrives for £50m, that’s £149m. And that’s gross.

Fabian Delph (centre) is one of five players Manchester City have signed this summer for a combined £99m

Kevin De Bruyne (left) has been linked with a £50m move to Man City from Wolfsburg for much of the summer

Q: So what have they earned from sales?

A: Selling Alvaro Negredo, Matija Nastasic, Dedryck Boyata, Scott Sinclair and Karim Rekik has made them £38.9m. But City are also making £2m this season from Stefan Jovetic in a loan fee from Inter Milan, which could rise to £4m, plus another £2.9m loan fee from Roma for Edin Dzeko. There are also contingent permanent sales lined up for both those players adding more than £18m extra that could be used for accounting purposes for sales this season. So for the purposes of City’s books, their sales could be up to £64m.

Q: So what’s the balance?

A: As things stand after Otamendi, they’ve spent as little as £35m net this summer. Adding De Bruyne would take it to around £85m.

Edin Dzeko scored twice on his first appearance for Roma after joining the Italians on loan from Man City

Q: That’s still a lot though, even if not £150m?

A: Yes, but again, for accounting purposes, that £85m will be ‘amortised’, or spread out over the terms of the players’ contracts, which are four and five-year deals. So for accounting purposes - which is what matters these days - what might look like a £150m spending spree, even with De Bruyne, is closer to £85m net, or closer to £16m to £20m per year in extra amortisation costs.

Q: But little over a year ago, UEFA were hammering City with a €60m (£42m) fine, a squad limit of 21 players for the 2014-15 Champions League and placing limits on wage spend and transfers. It’s some turnaround?

A: Yes, but UEFA also said if City balanced their books pronto, much of that punishment would be lifted. They said if City lost only £15m in the 2013-14 financial year, and only £7m in 2014-15, the punishments would be watered down. This was some ask for City, who had made cumulative losses of £606m between 2006-07 and 2012-13.

Q: And City did that, cut their losses?

A: Actually they lost £23m in 2013-14 but with allowable deductions they got inside the £15m, yes. And we can assume they also made less than £7m loss in 2014-15 because UEFA have lifted the punishment. The 2014-15 numbers will become public later this year.

Raheem Sterling (right) has arrived at Manchester City from Liverpool for £49m this summer

Q: So UEFA haven’t gone soft on City?

A: Well, they didn’t actually enforce the Champions League squad limits as envisaged after a threat of legal action. And the official FFP punishment notice made no mention of any provision for transfer spending limits being lifted this summer. So it’s highly likely that UEFA have made a few concessions to avoid a messy legal fight. But in essence, UEFA haven’t gone soft on City.

Q: But they’ve scrapped FFP in effect haven’t they? Clubs can spend freely again?

A: No. Actually they haven’t. FFP remains in place. Clubs can still only, in effect, spend what they earn. There are some exceptional circumstances that now allow some clubs to lose more than others, if their owners are good for it. But those circumstances don’t apply to City. They apply to clubs who are changing owners, for example, and need a short-term cash boost to bring themselves up to speed. A bit like City had under Sheik Mansour between 2008 and now.

Sheik Mansour (centre) and City are able to spend relatively freely again after two years of constraints

Q: What are the limits on City’s losses now?

A: In theory they should be the same as everyone else. Under the most recent FFP rules, which you can read here and which are deeply fascinating, clubs can lose about £7.5m a year, as long as their owners are good for it. That’s grossly simplifying the situation but pretty much what you need to do.

Q: So City won’t go back to losing loads of cash every year?

A: They shouldn’t. Not with all the riches on offer at the top of the Premier League and, from this season, much more cash in the Champions League.

Q: Anything else?