Maley returned to work as an administrator with Celtic. In the 1901-02 season Manchester City was relegated from the First Division. Sam Ormerod resigned and was replaced by Tom Maley. In a pre-season public practice game, Di Jones, who played with Billy Meredith in the Welsh national team, gashed his knee. Despite treatment from the club doctor, within a week the wound had turned septic and the player died.
Maley decided to build a team around his star players, Billy Gillespie and Billy Meredith. This included players such as Billy Jones, Herbert Burgess, Sandy Turnbull, Irvine Thornley, and Jimmy Bannister. That season Manchester City won the Second Division championship by scoring 95 goals in 34 games. The top marksmen were Gillespie (30), Meredith (23), Turnbull (12) and Bannister (12).
In the 1903-04 season Manchester City finished in second place in the First Division. They also had a good FA Cup run defeating Sunderland (3-2), Arsenal (2-0), Middlesbrough (3-1) and Sheffield Wednesday (3-0). Manchester City played Bolton Wanderers in the final at Crystal Palace. The only goal of the game was scored by Billy Meredith.
The Football Association was amazed by Manchester City's rapid improvement and that summer they decided to carry out an investigation into the way the club was being run. However, the officials only discovered some minor irregularities and no case was brought against the club.
The following season Manchester City again challenged for the championship. City needed to beat Aston Villa on the final day of the season. Sandy Turnbull gave Alec Leake, the Villa captain, a torrid time during the game. Leake threw some mud at him and he responded with a two-fingered gesture. Leake then punched Turnbull. According to some journalists, at the end of the game, Turnbull was dragged into the Villa dressing-room and beaten-up. Villa won the game 3-1 and Manchester City finished third, two points behind Newcastle United.
After the game Alec Leake claimed that Billy Meredith had offered him £10 to throw the game. Meredith was found guilty of this offence by the Football Association and was fined and suspended from playing football for a year. Manchester City refused to provide financial help for Meredith and so he decided to go public about what really was going on at the club: "What was the secret of the success of the Manchester City team? In my opinion, the fact that the club put aside the rule that no player should receive more than four pounds a week... The team delivered the goods, the club paid for the goods delivered and both sides were satisfied."
The Football Association was now forced to carry out another investigation into the financial activities of Manchester City. Tom Maley was interviewed and he admitted that he had followed what seemed like standard English practice by making additional payments to all their players. He claimed that if all First Division clubs were investigated, not four would come out "scatheless".
As a result of their investigation, the Football Association suspended Tom Maley from football for life. Seventeen players were fined and suspended until January 1907. Billy Gillespie refused to pay his fine and instead emigrated to the United States.
As Gary James pointed out in Manchester City: The Complete Record: "Basically, the entire squad that had finished as FA Cup-winners in 1904 and narrowly missed out on the Championship two years running were banned. This brought a premature end to City's first golden age."
Journalists were aware that virtually every club in the Football League was making illegal payments to its players. Football writers based in Manchester argued that the club, being a northern side, were being made an example of, and thousands of people complained to the Football Association, but it refused to reduce the bans and fines.
Manchester City was forced to sell their players in order to raise the money to pay the fines. At an auction at the Queen's Hotel in Manchester, the Manchester United manager, Ernest Mangnal signed Billy Meredith for only £500. While at City he scored 145 goals in 338 games. Mangnal also purchased three other talented members of the City side, Herbert Burgess, Sandy Turnbull and Jimmy Bannister. In 1906 John Henry Davies, the chairman of Manchester United, provided the funds for Meredith to set up a sports-equipment shop in St Peter's Square, Manchester.
Tom Maley now became a headmaster of a school in Glasgow. However, in July 1910 the Football Association lifted his suspension and the following year he became manager of Bradford Park Avenue. During his time at the club Bradford achieved its highest position in First Division of the Football League.
Tom Maley died on 24th August 1935.