The Parramatta Eels are facing a fine of $525,000 for salary cap breaches last year.
The NRL issued a breach notice to the club on Thursday which also imposes a penalty of 4 competition points for breaches of the cap.
The competition points will be deducted at the start of the 2016 season unless the Eels undertake an independent review of its governance and organisational capability - and implement changes recommended by that review.
CEO Dave Smith said on Thursday the breaches were significant and were the product of inadequate oversight and governance at the club, largely by previous administrations.
He said that in 2014 the club overspent in each of the four salary cap categories. The amount of each breach is:
• NRL Top 25 - $101,718
• NRL 2nd tier - $233,036
• NYC Top 20 - $60,915
• NYC 2nd tier - $8277
In addition, benefits provided to Eels players by the Parramatta Leagues Club in 2013 were also identified and represent a breach of the salary cap.
Mr Smith said the NRL had worked proactively to try to help the club avoid breaching the caps. The club had been given multiple warnings that it was in danger of breaching the caps but did not take sufficient steps to address the non-compliance.
He said that the NRL generally imposed a fine commensurate with the level of the breach.
But the club would be fined an additional penalty, taking the total to $525,000, for failing to take action to rectify its salary cap problems despite being warned to do so.
Mr Smith said the club's governance had failed but he acknowledged that steps were now being taken to improve the systems at Parramatta.
He said the club would have until 29 February next year to undergo an independent governance review and implement the changes recommended by that review.
This will include a review of the club's organisational capability.
The club must also ensure it does not breach the salary cap rules before 29 February 2016.
If the club fails to satisfy these conditions it will start the 2016 Telstra Premiership on minus four competition points.
"The salary cap is one of the reasons we have the closest sporting competition in Australia," Mr Smith said.
"We have to continue to take a hard line against breaches, particularly where a club's governance and compliance systems are demonstrated to be inadequate.
"This action is aimed at improving the underlying problems at the club which have caused this breach."
Mr Smith said Parramatta would have an opportunity to respond to the breach notice before a final determination is made.
The Sydney Roosters also face a fine of $41,292 for a breach of the salary cap rules. The breach related to inaccurate reporting of education allowances in the Club's NYC Top 20. The Roosters will also have an opportunity to respond to the breach notice.
