Manuel Pellegrini signs new two-year deal at Manchester City - so what about Pep Guardiola?

Pellegrini was heavily linked with the sack at the end of last season

Manuel Pellegrini (Getty)

Manuel Pellegrini has signed a new two-year contract to stay at Manchester City.

The Chilean was reportedly on the brink of being sacked at the end of last season after rivals Chelsea strolled to the Premier League title, with Bayern Munich boss Pep Guardiola heavily linked with a move to the Etihad.

But surprisingly, City and Pellegrini have agreed to a new deal that will keep the 61-year-old at the club until at least July 2017; Pellegrini's backroom staff have also been handed new deals.

The club will hope Pellegrini's new contract ensures he can mastermind a title challenge this coming season without having to deal with constant rumours regarding his future.

The club's chief executive, Ferran Soriano, said: "We are delighted to reach this agreement with Manuel Pellegrini, who has already contributed so much to the development of Manchester City in his first two years with us, and we look forward to further progress in the seasons ahead.

"This agreement allows Manuel to focus on the challenge of guiding a team capable of both fighting for domestic titles and competing for European honours."

Pellegrini himself said: "I am proud to manage Manchester City FC and am therefore very pleased to have agreed this contract.

"I have a very good quality group of players and a great team of people to work with on and off the field and at all levels of the club.

"I am focused on the coming season and confident that my team and I will respond to the constant support shown to us by everyone, including of course our fantastic fans."

Additional reporting from PA