The football club has agreed a deal worth between £10m and £12m a year, over 10 years, with its current Abu Dhabi airline shirt sponsor.
Etihad’s shirt sponsorship of Manchester City – which is owned by Sheikh Mansour bin Zayed al Nahyan of Abu Dhabi – is worth around £2.8m a year.
The deal will be a boon to Manchester City’s finances, after the football club reported a loss of £121m in its financial year ending May 2010.
The deal also means that Manchester City will boost its chances of meetings Uefa’s Financial Fair Play (FFP) rules.
FFP rules could see football teams that make more than £40m during a three-year period, barred from European competitions.
The ruling begins this coming season.
According to Uefa guidelines, commercial deals that appear artificially inflated could contravene regulations.
But there is no suggestion that the latest Manchester City deal falls into this category.
Neither party was available for comment.