The Canada manager believes Manchester City should face severe punishment after an independent commission found the club guilty of the vast majority of charges brought against them.
Manchester City have appealed the verdict, which covered alleged financial breaches between 2009 and 2018, but Marsch believes the findings confirmed concerns that were already widespread within English football.
“I think Man City should be punished severely. I think they should have to go down, and by the way, everyone knew about it. Everyone knew,” Marsch told the Guardian.
Marsch was Leeds United manager between February 2022 and February 2023 and said he had already questioned City's finances during his time in the Premier League.
He specifically recalled the summer of 2022, when Leeds and City were among the clubs reporting profits despite operating in very different financial circumstances.
“For us, we did make money, because we sold Raphinha, we sold Kalvin Phillips [to City]. We had a lot left over from what we bought,” Marsch said.
“At the time, we weren't in a position financially to not save. Our ownership didn't have deep pockets.”
Marsch said he was therefore surprised when City also announced a profit.
“Whereas when Man City says this, I was literally like, ‘Are you kidding me? Is this some kind of joke?’”
He also questioned the reported £52 million fee City paid Borussia Dortmund for Erling Haaland, arguing that the numbers did not appear to make sense to him at the time.
“When they said they got Erling Haaland for £52m, it's like: ‘Yeah, OK, sure’.”
Marsch added that he had noticed what he described as inconsistencies but felt there was little he could do about them while competing in the Premier League.
“So, I knew there were inconsistencies in it, but what can you do? You just put your arms in the air and go, ‘This is football’.”
The summer in question saw City report a £2.4m profit, while Leeds announced an operating profit of £5.5m after returning to the Premier League.
City's financial position had improved significantly after their run to the 2021 Champions League final and another Premier League title under Pep Guardiola.
Leeds, meanwhile, used income from the sales of Phillips and Raphinha to fund a major recruitment programme, spending close to £140m on new players before ultimately being relegated at the end of the 2022-23 season.
City have maintained their innocence and appealed against the independent commission's ruling. Much of their defence is expected to centre on the argument that commercial contracts were funded by the Abu Dhabi government rather than directly by the club's owner.
Marsch, however, believes the punishment should go as far as relegation.