Watford could seek compensation from Manchester City over the sale of Jadon Sancho, following allegations that they made an illegal payment to his family.

The Hornets are understood to have written to the FA asking to be kept up to date regarding the details of their investigation into whether or not City made payments to Sancho’s family and his agent, Emeka Obasi, prior to him leaving the club.

Details of the story, which were revealed in the Times on Friday evening, claim that Watford have not made an independent complaint to the FA, but have asked to be kept informed of any developments or conclusions.

If any of the alleged illegal payments are proven, they would be in breach of multiple FA rules, which could have cost Watford tens of millions of pounds.

FA and Fifa rules state that agents are not allowed to represent players until the year they turn 16, while it is prohibited to make any financial inducement to a young player’s family. So far Watford are reserving the right to take City to arbitration.

The Hornets received £200,000 in compensation when Sancho left their academy aged 14 for years ago.

The 18-year-old, now an England international and a regular starter at Borussia Dortmund, is valued at more than £100 million.

Watford are thought to be prepared to take City to arbitration if it is proven that Sancho’s decision to leave them was influenced by an unlawful payment.

The Times story also revealed the existence of an internal document from Manchester City that dated back to 2014, that proposed making a payment of £225,000 to the player’s family for “family support”. Whether or not the payment was ever made remains unclear.

The FA confirmed it is investigating the allegations, while City refused to comment on specifics, but said accusations of financial irregularities were “entirely false”.