The bigger shock was Man United losing 2-1 to Basel on a night that saw United captain Nemanja Vidic carried off with a bad knee injury.
United only needed a draw to progress but went behind after only nine minutes when Marco Streller fired home after Xherdan Shaqiri’s cross was kicked out by David De Gea.Unietd created chances but Wayne Rooney squandered several opportunities to equalise as he scuffed two chances.
With United chasing the game, Basel hit them on the counter attack when Chris Smalling was caught ball watching and allowed Alex Frei to nod a Shaqiri cross into the back of the net to make it 2-0.
Phil Jones was able to get one goal back for United when his header, just, crept over the line but they failed to muster a second goal and will now enter the Europa League after finishing third in Group C behind Benfica and their conquerors Basel.
Meanwhile at the Etihad Stadium, City were knocked out despite beating Bayern Munich 2-0. City needed a win and Villarreal to defeat Napoli, but the Italians won 2-0 meaning both Manchester sides will now play Europa League football in the new year.
The disappointment of not progressing to the knockout stages cannot take away from what was a good City performance against one of the best teams in Europe. City got on the scoreboard in the 36th minute when Edin Dzeko laid the ball off to the David Silva, and he lashed home from 20-yards.
Sergio Aguero then saw a shot blocked from three yards from the line by former City star Jerome Boateng after Hans-Jorg Butt had been beaten. And five minutes into the second period Yaya Toure extended their lead as he prodded the ball past Butt following another perfect pass from Dzeko.
So both Manchester sides will be faced with Thursday-Sunday matches because if their Europa League involvement and that good have a major role in the title race.