Bankrolled by Abu Dhabi owner Sheikh Mansour bin Zayed Al Nahyan, City have splashed more cash on players than even big-spending Real over the past four seasons and made their debut in Europe's elite club competition last term.
The Premier League champions forked out 442 million euros to snare the likes of Sergio Aguero, David Silva and Mario Balotelli, the most of any European club, according to the latest Prime Time Sport Transfer Review published this month.
Real, chasing a 10th continental crown, were the second-highest spenders, splurging 428 million on players including Cristiano Ronaldo - a transfer record at 94 million - Kaka, Karim Benzema and, most recently, Luka Modric.
Real's bitter Spanish rivals Barcelona came in a distant third with an outlay of 278 million.
"It's clear that we don't have the history like Real Madrid but I think that Manchester City have won some trophies and we want to win now - and for the next 10 years," City manager Roberto Mancini was quoted as saying by Sky Sports on Sunday.
"Manchester City will be a top team like Real but they have a big history and that's the difference," added the Italian.
City and Real have been drawn in what looks to be the toughest group in this season's edition with Borussia Dortmund and Ajax, the German and Dutch champions respectively and both former winners.
The current champions of England and Spain are meeting for the first time and Real made it to the last four last term, while City failed to progress beyond the group stage.
The match at the Bernabeu pits Mancini against the man who replaced him at Inter Milan, Real coach Jose Mourinho.
The pair have locked horns before when Mourinho's Porto side beat Mancini's Lazio outfit 4-1 on aggregate in the semi-finals of the 2002/03 UEFA Cup.
Real come into the match after some poor displays in La Liga and they have taken only four points from their opening four games to slip eight points behind Barca.
Mourinho was highly critical of his players after Saturday's 1-0 defeat at Sevilla, saying that some had lacked commitment and focus and they had deserved to lose.
City, fourth in the Premier League following Saturday's 1-1 draw at Stoke City, are excited about their latest foray into Europe according to football development executive Patrick Vieira.
"The club is working hard to compete against the best in Europe," the former France and Arsenal midfielder told UEFA's website this week.
"It was exciting last year and when you have a good taste of something you want to go back again."
Real Madrid: 1-Iker Casillas; 17-Alvaro Arbeloa, 4-Sergio Ramos, 3-Pepe, 5-Fabio Coentrao; 14-Xabi Alonso, 6-Sami Khedira; 22-Angel Di Maria, 10-Mesut Ozil, 7-Cristiano Ronaldo; 20-Gonzalo Higuain.
Manchester City: 1-Joe Hart; 3-Maicon, 4-Vincent Kompany, 6-Joleon Lescott, 22-Gael Clichy; 7-James
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