How does this benefit Man City?
If confirmed, it would be a major boost for Manchester City in both the short and medium term. Pep Guardiola's current contract expires next summer and speculation over his future has been rife for months.
This would end that situation – at least temporarily – and allow the Citizens to plan for the 2025-26 season and beyond with more certainty.
Short term benefits?
Despite finishing second in the Premier League and being expected to go far in the Champions League, Man City have not played well this season and their recent results have also been poor.
The run of four straight defeats before the November international break was the worst of Guardiola's managerial career. While injuries were a factor, the manager's future may have affected the players. So City need to remove that uncertainty and allow everyone to focus more on the job at hand.
What impact does this have on team rebuilding?
While Guardiola's new deal could bring immediate change to the squad, there are already signs that some players will be leaving.
The news of Guardiola staying on will certainly strengthen the club's position in negotiations and facilitate the arrival of director of football Hugo Viana. City rarely make a move in the January transfer window but injuries and recent form will force a change.
After the winter, players like Kyle Walker, Kevin De Bruyne and Ilkay Gundogan - all over 33 - will need to be replaced sooner than expected.
Will this help Man City in their legal battles?
Not directly but this brings solid stability in a certain aspect to Man City.
The Citizens are battling 115 charges of breaching Premier League rules following an investigation into financial matters. The punishment could be severe, including relegation.
It is still unclear how this process will work and what impact it will have. However, Guardiola has defended the club strongly and there is no doubt about his loyalty. Some reports suggest that there will be no break clause in Guardiola's contract even if Man City are relegated.
