City host the second-leg of their Champions League quarterfinal with the score locked at 3-3.
McManaman told the Mirror: "Now the Champions League really begins. This is the part of the competition in which only the best teams remain.
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"Real Madrid should score a couple of goals at the Etihad to qualify. We start from 3-3, so Manchester City are the big favourites. They are the reigning champions, the in-form team and now they are back at the top of the Premier League.
"Real Madrid will be stronger next year but now they are not at City's level. Two years ago they scored four against Real Madrid and also last year. I think it will be difficult for Real, if we look at the two teams and what happened in the past. It's no surprise that Pep continues to fight for these trophies."