Parramatta have been issued with a breach notice by the NRL stripping them of 12 premiership points and fining them $A1 million for systemic rorting of the salary cap.
The club also faces having five key staffers deregistered, including chairman Steve Sharp and CEO John Boulous, for third-party breaches which currently have the Eels about $570,000 over the salary cap.
The NRL says Parramatta will be given "a reasonable time" to respond before penalties are enforced.
The penalties leave the rejuvenated Eels with a glimmer of hope of making this season's final series.
While they lose all 12 points they've accrued in their best start since 2001, they can still earn a maximum of 34 points - with 28 generally considered the minimum requirement to make the finals.
However, the Eels will not be allowed to accumulate any more points until they get themselves under the salary cap, meaning they need to shed players or renegotiate deals.
NRL CEO Todd Greenberg said the club had been fined for breaches of the salary cap rules in five of the last six years and now it had been exposed for operating a system designed to cheat the cap.
"We will need to take a stand on behalf of the fans, the club and the game," Greenberg said.
"This would be a tough outcome for many people, particularly the players and fans, but we believe it would be the start of a process to make the Parramatta club the powerhouse it should be."
The NRL's integrity unit investigation found the Parramatta club breached the salary cap rules and code of conduct by:
* Paying players undisclosed remuneration from its own resources.
* Procuring third party agreements for players in breach of the salary cap rules.
* Conspiring with club suppliers to inflate or issue fictitious invoices to raise cash that was then relayed to players
The NRL has issued notices to three members of the club's board and two members of the executive requiring them to show cause why their registrations should not be cancelled.
They are chairman Sharp, deputy chairman Tom Issa, director Peter Serrao, CEO Boulous and football manager Daniel Anderson.
