Liverpool have the same problem.
http://www.liverpoolecho.co.uk/spor...ews/liverpools-plans-fill-2000-empty-14164939
Tickets sold, but not everyone in them.
Non-attending season ticket holders are the problem. Proof was the Burnley FA Cup where everyone had to buy a ticket. Empty seats in the North Stand miraculously vanished.
I agree with the points above that a significant number of season card holders don't go. I suspect city know who they are because they can track attendances.
It is a particular problem at city because of the massive gap between match-day prices and seasoncard prices. Without looking at it, I suspect City have the largest amount of cheap season tickets, and at the same time some of the most expensive match-day prices. Therefore a lot of City fans have decided to buy seasoncards, but not to go to all the games.
Solution: Ticket re-sale. There must be more and more casual City fans around now than ever who want to get to a game. We'd have never been able to sell 50k for a 3rd Round Cup game a few years ago.