City not budging on £2m for Sven

Manchester City have told Sven Goran Eriksson they will not increase their £2million-a-year pay offer and have lined up Blackburn boss Mark Hughes as their fall-back option.

Representatives of former Thai Prime Minister Thaksin Shinawatra, the club's new majority shareholder, had still not received an answer from Eriksson last night despite offering him the manager's job at City on Tuesday.

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It is understood Eriksson is holding out for more money than the £8m package on the table from City and Thaksin fears this may scupper the deal to bring the former England coach to the club.

City have far from given up on Eriksson and remain optimistic that he will be the club's new manager by next week but Sportsmail understands that Blackburn manager Hughes, currently on holiday in Majorca, is Thaksin's definite second choice.

Despite the fact that the former Wales manager is a Manchester United legend after two spells at Old Trafford, Thaksin and his advisers are convinced they can bring him to the club if Eriksson turns the job down.

City's new owners began yesterday optimistic that Eriksson would give them an answer before the end of the day and at one stage were even speaking about an official announcement.

But the Thais have been concerned all along that Eriksson may want more money than they were prepared to pay and it is clear they will stick to an original offer that would make him the highest-paid manager in City's history.

Meanwhile, Thaksin is hoping to begin his reign at City by delivering a glamorous preseason friendly with Real Madrid to the City of Manchester Stadium.

Thaksin's aides spent much of yesterday trying to set up the game, which would take place in late July.