Manuel Pellegrini insisted his decision to let Alvaro Negredo leave Manchester City was right for the club.
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The City boss said that the blame should lie with UEFA for punishing the Premier League champions after they were found guilty of breaching financial fair play regulations.
The 29-year-old, who only signed for City 12 months ago, has gone on loan to Valencia for the season, which will lead to a 30 million-euro permanent move to the Spanish club next summer.
Pellegrini explained that the Spain international wanted to return to his home country, but he believes the biggest factor was the UEFA sanction, which fined City 49 million pounds, limited the club to a 49 million-pound net spend this summer and saw their Champions League squad cut from 25 to 21 players.
They are allowed to name 17 non-homegrown players in their Premier League squad but just 16 in Europe and Pellegrini suggested Negredo would have been the foreigner to miss out.
He said in his prematch news conference ahead of Saturday's meeting with Arsenal at the Emirates: "The decision for Alvaro Negredo to go was [made for] two very important reasons. The first was that we have the restriction for the number of the players we can use in the Champions League.
"We have one player more that we cannot use: in this case Alvaro, who was injured, so that was the player who was not going to be on the [squad] list.
"For him, it was very important because he wanted to go back to Spain so I thought it was the best decision for the club but it all starts from the restriction about the number of players. We have restrictions about the amount of players and the money we can spend."
Negredo scored 23 goals in his only season as a City player and his departure means Pellegrini, who prefers to have two players for every position, now only has three specialist centre-forwards in his squad.
He added: "It is one striker less so yes it is important but we have Edin Dzeko, Sergio Aguero and Stevan Jovetic and we have other players that we can use behind the striker, so we have other solutions."
Pellegrini deemed the sanction unfair and shrugged off suggestions that they are lucky that, while they only lose one non-homegrown player from a squad comprised largely of foreigners, they only have to name one club-trained footballer in their 21-man European squad.
He added: "We cannot be fortunate when we have any kind of restrictions. I think it is a very important advantage for them [other clubs] when you have to play four competitions to have an important amount of players.
"I think the best thing is to have two players for each position. It is difficult for me to understand the punishment for financial fair play because the club spend money because they wanted to grow. They finished a new training ground. They were a small team and wanted to be a big team but now we have that punishment, that sanction and we have to play with these restrictions."
City were linked with Radamel Falcao as a replacement for Negredo but the Colombian signed for Manchester United instead and Pellegrini said: "I don't talk about players from other clubs."
Besides Negredo, City also loaned out Micah Richards on deadline day with the right-back joining Fiorentina. Richards, who was City's longest-serving player, complained that he was not afforded enough opportunities last season.
Pellegrini shrugged off his comments, adding: "I never have a response to players through the press. I always speak to the players face to face."