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Due to the nature of Erfworld, the larger a side grows, the harder it becomes to maintain.
This is because the amount of Shmuckers a city generates for its side is not a fixed amount. After a side gets above a certain number of city levels, the Shmuckers produced by ALL of them starts to go down.
If a Warlord manages a city, costs are lowered for things like city improvement and production of extra equipment and provisions, the amount of Shmuckers the city produces is increased, and the upkeep for units which spend the entire turn in the city is reduced.
This does not limit the number of cities a a side has, just the levels. A side with four level 4 cities would suffer as much as a side with sixteen level 1 cities.