Royle won his compensation case after his dismissal following the club’s relegation in May 2001.
Royle, in charge at Ipswich, sued the club claiming he received only a fraction of the pay-off he was due.
A judgment at Manchester Crown Court yesterday concluded City were a Premiership club at the time of Royle’s dismissal, so he was entitled to a higher sum than the £150,000 he received.
The judgment hinged on whether City had returned their Premier League certificate prior to Royle’s departure, which they had not.
Royle issued a statement after the verdict, saying City’s treatment of him was “scandalous and unwarranted”.