They now have no hope of advancing in Champions League play.
City spent the first half against Real Madrid as they've spent the rest of the Champions League campaign: playing terrible and listless soccer.
Karim Benzema netted an easy goal in the 10th minute after Cristiano Ronaldo helped break down the defense and Madrid was off to a 1-0 lead.
They should have built on that lead. City was that bad in the first half. Their defense was in shambles and it got to a point where Roberto Mancini had to put four in the back to ease the strain on keeper Joe Hart. That helped tighten things up, but it didn't do anything for their attack.
The second half was a different story. City came out more aggressive and started to earn some chances. They earned a penalty in the 73rd minute, which was successfully converted by Sergio Aguero.
They had a few chances after that to try to net the game winner, but Madrid weren't having it. Everything was turned away, and the contest ended with a draw, which is just fine for Madrid. They have clinched a berth in the next round.
For Manchester City, not so much, and they have no one to blame but themselves. This talented squad has lacked focus and discipline all throughout this Champions League run.
They finally strung together a solid half of play, but it was too late.
Sergio Aguero: A
Aguero was fantastic. He drilled the equalizer easily on a look-away penalty kick and his contributions went far beyond that.
He was City's most consistent offensive presence. He did go off the pitch in the 88th minute, which was a bit of a surprise given that City desperately needed a goal. He was replaced by James Milner, but that is beyond Aguero's control, and he was active and effective all match.
Joe Hart: B
Hart allowed an early goal, but you can't pin that on him. Maicon was left dazzled by Di Maria's cross and completely lost Benzema, which set up a goal Hart could not be expected to stop.
Hart was solid, and his back line did not help him much.
Cristiano Ronaldo: B
Ronaldo didn't net a goal this match, but he was his usual brilliant self. He did a wonderful job helping break down the defense—especially in the early going.
Ronaldo finished the match after firing off four shots on goal and drawing six fouls.
Karim Benzema: B+
Benzema did a wonderful job finding open space near the goal to find an easy score. It was an astute play, and he played well throughout.
He finished with four shots on goal, and he was active and aggressive all match.