Manchester City plan to increase capacity at the Etihad Stadium but must wait for Manuel Pellegrini

Manchester City will announce plans for a £50m investment to expand their stadium capacity by 6,000, with an option to go even bigger, as they continue negotiations to bring the Chilean Manuel Pellegrini in as successor to Roberto Mancini, The Independent can reveal.

Pellegrini's appointment is neither imminent nor a done deal, despite reports from Spain that he is leaving Malaga to join City on a two-year contract. But City are confident the 59-year-old will join them and are also preparing to build on a high volume of sell-outs at the Etihad by adding a third tier to their South Stand, taking the capacity to 54,000 – leapfrogging Newcastle and Sunderland to command the third highest capacity in the Premier League, after Manchester United and Arsenal.

Subject to consultation with the local community in east Manchester, a planning application will be submitted in the autumn which may also include proposals to expand the north side of the ground. That could see the stadium capacity reach closer to Arsenal's 60,300.

City's feasibility studies for ways of expanding their ground have included an analysis of lifting off the roof and creating an entire new tier to boost capacity to over 70,000, hugely increasing match-day income. But a more organic type of development – increasing the stadium bit by bit – is considered the best way to accommodate new capacity as the club's growth brings in more fans. The stand, scheduled to open in the summer of 2015 and subject to public consultation work which begins next month, will accommodate a substantial number of far lower priced tickets season tickets costing under £300. The reorganisation of the ground will also see away fans moved – something City fans have been asking for over a number of years.

The plans, scheduled to be completed in the summer of 2015 and subject to public consultation which begins next month, include lower-priced season tickets costing under £300. Tickets sold on match days will make up the rest of the extra capacity which the club does now need. Some hospitality sales will also be taken up in the new tier, which the club will show has been drawn up in keeping with the rest of the 11-year-old stadium.

The Etihad, which was designed by architects Arup for the 2002 Commonwealth Games, has a capacity of 47,805 and the extra tier will take it well above Liverpool and Chelsea, other clubs who desperately need a way of increasing match-day revenues but do not have the room to expand that City enjoy.

City require the team to develop even more radically than their stadium as they seek to boost their domestic and global following to a level where they would be capable of filling a 70,000-seat facility like Manchester United. They are some way off that at this stage. Though the dismissal of Mancini on Sunday, announced late on Monday, has been met with fierce criticism, there is a deep conviction at City that changing managers is the right course of action.

It remains difficult to find any players to contradict the more readily available impression that Mancini was unpopular. The Independent's attempts to locate one drew another blank. It seems significant that even the club captain, Vincent Kompany, an articulate and prolific user of social media, has offered no comment or good wishes towards Mancini.

Malaga's two remaining La Liga fixtures, at home to Deportivo on 26 May and away to Barcelona on 1 June, are limiting City's ability to deliver Pellegrini, with the Spanish club still seeking a Europa League place. The attempt to recruit the Chilean was said last night to remain "absolutely, certainly not, a done deal".

A two-year contract would give Pellegrini significantly less security than Mancini's most recent five-year deal, indicating that City want to see how the appointment pans out rather than making an emphatic statement of intent. Because of Malaga's Champions League ban for next season and Rayo Vallecano's failure to secure a Uefa licence, La Liga's ninth-placed club could qualify for the Europa League. Malaga are sixth, seven points clear of ninth-placed Getafe.