Manchester City have won their appeal against the £422,819 compensation awarded to Town manager Joe Royle at the High Court last July. Three Appeal Court judges reserved their judgement at the hearing last week but ruled in favour of City today.
Royle is reported to have been "stunned" by the judgement which also orders the Town manager to pay £50,000 of Manchester City's legal fees.
The former City boss was awarded £422,819 plus £65,000 costs by Judge Michael Kershaw at the High Court in Liverpool last July.
The Town manager claimed that his golden handshake when he left Maine Road in May 2001 should have been at an agreed Premiership level of £750,000 rather than the lower Division One sum he was actually paid.
Lawyers representing Royle argued that City were still effectively a Premiership club until their Premier League share was returned at an AGM in the following June.
City's legal people contended that a club is relegated when it is mathematically impossible for them to escape the drop.
Royle, who was not in court today, has been advised to appeal to the House of Lords but permission to do this has been denied.