An Abu Dhabi-based company aiming to buy Manchester City from former Thai premier Thaksin Shinawatra signed a memorandum of understanding with the Premier League club yesterday.
Announcing the memorandum in a short statement, City added: "A period of due diligence for all parties, including the FA Premier League has now been entered."
Abu Dhabi United Group for Development and Investment board member Sulaiman al-Fahim told Reuters yesterday he wanted to turn City into one of the top clubs in the league.
"The UK is the best league in the world and the idea is that Abu Dhabi would like to position itself as a sports and cultural hub," Fahim said, declining to give a value for the deal.
Fahim also said the group planned to buy new players before the transfer window closed last night.
"We are trying to be in the top four this season and will buy whatever is needed," Fahim said.
The UAE is the world's fifth-largest oil exporter and the capital controls 90 per cent of the country's oil reserves. Flush with petrodollars from soaring oil prices, Abu Dhabi has been investing abroad to diversify its economy.
Gulf-based investment firms have poured billions of dollars in recent years into businesses ranging from western banks and stock exchanges to sports clubs and circus troupes.
Fahim said the group also planned to use Manchester City's coaching set-up as a way of developing local players from the United Arab Emirates.
Buoyant about the club's prospects, Fahim said: "I want you to see the value of the club within three years."
Fahim, chief executive officer of local real estate firm Hydra Properties, is already building a football academy in partnership with Italy's Inter.
"Our goal is very simple... to make Manchester City the biggest club in the Premier League," Fahim told local magazine Arabian Business.
The deal was struck late on Sunday night between Thaksin and the Abu Dhabi group, the magazine said.
Fahim said Thaksin would continue at the club as an a honorary board member.
City have long lived in the shadow of Manchester United and have not won a trophy for 32 years.
They were last champions of England in 1968.
Thaksin bought City in July 2007 after being deposed as Thailand's prime minister in a military coup, hiring former England coach Sven-Goran Eriksson as manager and bankrolling a string of foreign signings.
However, despite a promising start, City faded last season and Eriksson was replaced by former Manchester United striker Mark Hughes in June.
Gulf states have a keen interest in the top-flight of English football.
Dubai International Capital, a government-run investment fund, was involved earlier this year in drawn-out talks to potentially buy Liverpool from its US owners, while Dubai-bases Emirates airline is a major sponsor of Arsenal.
Manchester United last month signed a marketing deal with a Saudi Arabian telecommunications firm.