The Daily Mail says City will ask for £10m in compensation if - as expected - teenage striker Sturridge quits Eastlands for Chelsea this summer.
City are resigned to losing the 19-year-old to Stamford Bridge after the youngster allowed his contract run down.
But it is understood that City will pitch for a 'development fee' of £10m when the matter goes before an FA tribunal.
Players under the age of 24 cannot switch clubs under a 'Bosman' free transfer, a rule designed to ensure that those who develop young talent do not lose it for nothing.
City will make a claim for a downpayment in excess of £5m and propose that the remainder of the money comes in performance-related instalments.
Chelsea will - in all likelihood - offer substantially less for a player they have been tracking for three or four years.