The National Rugby League has threatened the Melbourne Storm with exclusion from the 2011 competition if they do not get their books in order by March.
NRL chief executive David Gallop stripped the Australian club of the premiership it won last year and its 2007 title on Thursday after finding that it had breached the league's salary cap for the past five years.
Two of the club's senior management have been stood down and the club has been fined $A1.6 million.
The ABC reports an audit found the Melbourne Storm had been operating two sets of books. Additional payments amounted to $A1.7 million over five years and $A700,000 in 2010.
The Melbourne Storm will be playing for pride alone this season after the NRL ruled the team could not accrue any competition points.
A former chief executive of the Melbourne Storm, Chris Johns, believes the NRL has gone too far.
"Making them run around as a sideshow for the rest of the year is going to make it extremely difficult. I really think they have to be able to compete in the competition."
Storm assistant coach Robbie Kearns says the team will find it hard to focus on football.
"I daresay the boys' heads aren't in the right frame at the moment. They're obviously very shattered and very disappointed."
The Melbourne Storm suffered more setbacks on Friday, after three major sponsors pulled their support.
Dark day for Storm
Melbourne Storm chairman Rob Moodie says it is a dark day for the club and it has let the Australian sporting public down.
Melbourne joined the NRL in 1998 and won their first grand final in 2007 and again last season.
The Storm defeated Super League champions Leeds 18-10 in the World Club Challenge in February.
Former NRL chief executive David Moffett says the punishment is a salutary lesson.
He told Radio New Zealand's Morning Report programme on Friday he believes the players' agents must have known what was going on.
It is possible that Victorian police could hold a fraud inquiry.
Waldron resigns form rugby franchise
The Melbourne Rebels Super Rugby franchise has confirmed that chief executive Brian Waldron, who is at the centre of the Melbourne Storm salary cap breach, has resigned.
Waldron, a former chief executive of the Storm from 2004 to 2009, offered his resignation to the rugby club on Friday morning and it was accepted.
The Rebels say their books will also be scrutinised. The team is due to enter the new Super 15 rugby series next year.
St George Illawarra new favourite
Centrebet says it will refund all bets on Melbourne to win this year's premiership.
The agency has named St George Illawarra as the new favourites to win the tournament.
The TAB in New Zealand has suspended betting on Sunday's match between the Storm and the Warriors in Melbourne.
However, it says all existing bets will stand, as will bets placed on the Storm to reach the top eight or win the premiership, as the nature of futures betting is that it encompasses all eventualities.