Former Aston Villa manager Graham Taylor believes Barry has chosen City because they will challenge the top four next season.
"He has to believe that Manchester City will be signing the quality of player that will give them the best possibility of Champions League football the season after next," Taylor said earlier on Tuesday.
"I'm not suggesting Mark Hughes is going to be absolutely crazy in the salaries the club pay people, but the amount of money has to be a factor."
Taylor believes Barry could be put off joining a Champions League club by the knowledge that might not be guaranteed a place in their starting XI.
"He'll be aware that there's nothing more important than playing first-team football in a World Cup year," added Taylor.
"At Aston Villa it's almost certain that he would be a first-team regular. I think he would be at Manchester City, but I'm not so certain that would be the case at Liverpool."
Villa owner Randy Lerner confirmed last week that the Midlands club were in discussions with Barry regarding a new long-term deal.
Barry joined Villa as a trainee from Brighton and Hove Albion in 1997 and has made 443 appearances since making his debut in 1997.
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