City have been barred from the Champions League and Europa League from the start of next season and fined 30 million euros (£24.9 million) after being found to have committed "serious breaches" of financial regulations.
The heavy sanctions relate to an alleged overstatement of sponsorship revenue in the club's efforts to get around Financial Fair Play rules.
City, currently second behind runaway Premier League leaders Liverpool, have said they will appeal against the punishment through the Court of Arbitration for Sport.
But the damage to City on and off the field could be immeasurable if the ban is upheld.
And ex-England forward Marsh, ranked as one of City's greats after his spell there in the 1970s, is concerned the club's Abu Dhabi-based owner Sheikh Mansour could walk away in that case.
"If this decision is upheld it would not surprise me to see owner Sheikh Mansour sell the club," he tweeted.
"He has been superb for City and this is a huge kick in the balls. I wouldn't blame him."
City face an anxious wait to discover if their appeal is successful and in the meantime there will be speculation about Mansour and the futures of City manager Pep Guardiola and his star players.
'Come out fighting'
Guardiola and company may not want to stay at City if they are denied Champions League action.
But former City midfielder Michael Brown expects Mansour to fight to save the club's reputation and preserve their successful squad.
"What they've done as a football club, what they've done on the pitch, the way they've gone about it, I think they've been first class," Brown told the BBC.
"They've been honourable how they've gone about it, as usual like Manchester City. This will be a shock for them but it will be something that they'll come out fighting.
"The owners aren't here for the short term, they will take it on. If any owners will take this adversity, it will be these."
Former Manchester United and England midfielder Paul Ince disagrees with Brown and suggested the ban may convince Guardiola and his players to look for a way out.
Guardiola has won two Premier League titles, an FA Cup, and twice lifted the League Cup since arriving at the Etihad Stadium in 2016.
His current contract runs until 2021 amid reports he has a release clause that can be triggered at the end of this season.
"Manchester City are one of the biggest clubs in the world," Ince told BT Sport. "The best players want to go to the best clubs because of the Champions League. If they're not in it for the next two years, are they going to be able to get the best players?
"For Pep, they've got to win it this year. If they're not in it for the next two years, the question is what Pep's going to do and what players they're going to be able to attract."