According to Mirror Sport, despite the millions pumped into the Northern club by their Arab owners, the MK Dons boss thinks that money won’t guarantee them the league title.
"They should have finished in the top four last season and they didn’t," he said.
"There is every chance they will not finish there again because Liverpool will be better next season and Tottenham, Arsenal and Everton will also be up there."
The former Liverpool playmaker went on to suggest that the players being brought into Eastlands to attempt to take the club to the next level need to be chosen carefully.
"They have got to choose them carefully and buy the right ones. But if they keep doing what they are at the moment I don’t see them challenging Manchester United or Chelsea," he added.
"They have a turnover of 10 to 15 players every season and if they keep doing this they are not going anywhere.
"You need consistency and continuity at a football club. I don’t agree with what they are doing now."
So far this summer, City boss Roberto Mancini has welcomed in a hoard of new arrivals including German international Jerome Boateng, Spanish winger David Silva, and former Barcelona star Yaya Toure.
The Citizens are expected to land Mario Balotelli from Inter in the coming days, which would take their summer spending up to around £100 million.
"City have got bundles to spend and they need to spend wisely," Hamann continued.
"I am not sure if they are doing that. If you don’t do things right off the field it is hard to get them right on it. That transpires to the whole set-up including the backroom staff and doctors.
"The City fans will want to see new arrivals – but big names don’t win you games or win you titles."
The 36-year-old midfielder spent three years at Eastlands but admits he has been left surprised at how his former club are running themselves, insisting the sale of Richard Dunne to Aston Villa was a mistake.
"They have paid a lot of money for all the others and let him [Dunne] go. But I still think he is better than all the central defenders they have got at the club," he concluded.
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