City have splashed the cash in recent transfer windows and are keen to challenge for the title this season.
Liverpool face City in the Premier League on Monday.
“I see no reason why they should not win the league,” Hodgson said. “Chelsea did it and they were nothing like title contenders when Roman Abramovich took over the club.
“Blackburn, too, did it with Jack Walker, who came to a club who were never winning anything. They bought Alan Shearer, Chris Sutton, Tim Sherwood and…suddenly they were champions.
“I’m sure Manchester City will be devastated not to finish in the top three and qualify for the Champions League because so much money has been spent.
“The pressure for the manager is to make the players gel. That is always the same at a new club. We have the same situation at Liverpool, except we haven’t much money.”
