Pep Guardiola's side continue their bid for elusive European glory when they face Paris Saint-Germain in a mouth-watering semi-final next week, although the prospects of the fixture even taking place appeared to be in jeopardy after City were one of 12 teams announced for the controversial breakaway Super League three days ago.
A concerted backlash throughout and beyond football led to the Premier League leaders becoming the first team to officially withdraw from the project on Tuesday, with the other five England clubs involved following suit.
Former FA chairman Bernstein, who helmed City as they rebuilt from relegation to the third tier of English football at the end of the last century, is a lifelong supporter of the club, but feels let down and surprised by their actions.
PSG are the only team remaining in this season's Champions League who were not one of the Super League 12 and, when asked by Stats Perform News whether UEFA might prefer the Ligue 1 giants to prevail, Bernstein replied: "Listen at the moment I may be wishing myself PSG win it, I am so upset with City. They don't deserve to win it this year, given what's has happened."
The well-documented financial struggles of the likes of Real Madrid and Barcelona were a key factor in them and others pursuing the money-spinning tournament, although Berntein pointed out that is not an excuse City and their Abu Dhabi ownership can so readily grasp.
"I'm extremely disappointed and embarrassed and a little surprised," he said. "They're good owners, the people at City, I think. They don't need the money, frankly.
"One or two other clubs do need the money. There is one club in particular, who will remain nameless, who've got above about billion pound of debt and must be pretty desperate with COVID and everything else that has caused income to go down."
Last year, partially in response to the challenges of the pandemic, Bernstein was part of an eight-person group also including Gary Neville and Great Manchester mayor Andy Burnham, that put forward a "Manifesto for Change", which called for a new regulatory body independent of English football's existing structure.
He believes the Super League episode underlines the need for football to make drastic change at a moment when, for now, disaster has been averted.
"Why are some of these clubs like Barcelona and Real Madrid, with all their wealth and income, in such financial difficulty? Because they're paying massive wages in spite of COVID, in spite of income having been reduced for all the reasons we know.
"Why hasn't there been some wage sacrifice? Why haven't wages been controlled? In any other industry, one would have to cut expenditure to match income.
"[The Super League being stopped] is highly significant. Everyone pays lip service to this but football clubs are more than straightforward businesses. They are incredibly important in their communities. Fans have to be treated with respect and not exploited.
"Clubs always go on about not exploiting fans but, actually, in many cases they do – in terms of the size of ticket prices, the cost of merchandise and so on."
Bernstein did reserve praise for City manager Guardiola, who decried the Super League plans as "not sport" at a news conference on Tuesday, in what was arguably a key moment as momentum built towards the eventual collapse.
"Pep is in a strong position, he is almost untouchable. It's very good that he did it, as Jurgen Klopp did as well," he added.
"They have contractual positions with their clubs and you have others who won't speak out, and I've got some sympathy when they are employees and livelihoods are at stake.
"For anyone who spoke out, good luck to them and it was good that Pep Guardiola did it."