LISBON (Reuters) – After being eliminated at the quarter-final stage of the Champions League for a third straight year, Manchester City and manager Pep Guardiola, perhaps unexpectedly, find themselves at a crossroads.

Despite the criticism that Guardiola has faced for his cautious tactics in the 3-1 loss to Olympique Lyonnais on Saturday and the questions about whether he is over-complicating the task in Europe, there is no suggestion that the City hierarchy has lost confidence in the Spaniard.

After all Guardiola masterminded impressive 2-1 home and away wins over La Liga winners and 13-times European champions Real Madrid in the last 16 that saw his team head to Lisbon.

But the fact remains that Guardiola has only one year left on his contract with the club and while he is reported to be “open” to an extension, he hasn’t yet put pen to paper.

That itself wouldn’t be a problem if City’s hopes in the Champions League had materialised and he was looking to fine tune a winning team.

But City already had plenty of work to do in the transfer market, and after the Lyon defeat they may have even more recruitment to complete.

Agents and players that City will be targeting will want to know if they are joining a club that is pushing ahead with Guardiola for the next few seasons or whether a change on the bench – and the uncertainty that brings – is on the horizon.

Given the closeness of the relationships between Guardiola and Director of Football Txiki Begiristain and Chief Executive Ferran Soriano, who all worked together at Barcelona, it shouldn’t be difficult to get that situation ironed out.

It comes down to Guardiola’s desire and the fact that he has already brought in two new signings for next season – winger Ferran Torres from Valencia and central defender Nathan Ake from Bournemouth — for a combined total of over 60 million pounds ($78.50 million) plus add-ons — shows that a mini-rebuild is already under-way.

PROBLEM AREA

Torres is effectively a replacement for Leroy Sane, the German winger who has left City for Bayern Munich, but Ake is not likely to be the only central defensive acquisition.

That area has long been a problem for Guardiola at City, a matter that was highlighted on Saturday with the much-criticised decision to play three central defenders due to concerns over a lack of pace.

While Aymeric Laporte is the one fixed starter from Guardiola’s list of defenders, 19-year-old Eric Garcia was a surprise start given he has turned down a contract extension and is widely expected to return to Barcelona.

Brazilian Fernandinho has been converted into a defensive role from his previous midfield holding position but at 35, he isn’t a long term solution.

John Stones and Nicolas Otamendi were left on the bench and it would be no surprise if both were to be with different clubs very soon given Guardiola’s evident lack of confidence in them.

City have been linked with Napoli’s Senegalese defender Kalidou Koulibaly, although a deal for the 29-year-old might not be easy to pull off.

Even trickier will be finding a replacement for David Silva, who is leaving the club after a decade of outstanding service. Bernardo Silva was seen as the natural successor but has been less prominent in Guardiola’s plans this season.

Some reports have linked City with Atletico Madrid’s Portuguese talent Joao Felix, although the 20-year-old only moved to Spain from Benfica last year in a deal worth over 100 million pounds.

There are still questions over the left-back position, which Benjamin Mendy has yet to make his own, with the right-footed Joao Cancelo playing that role against Real and Lyon and there may be a temptation to look for a younger striker as back-up to Sergio Aguero and Gabriel Jesus.

Plenty in Guardiola’s in-tray then when he gets back to Manchester – he will probably be glad for the distraction.

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(Reporting by Simon Evans, editing by Pritha Sarkar)

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