Australia's National Rugby League has stripped Melbourne Storm of two premiership titles and all of their competition points for the 2010 season after they were found to have committed salary cap breaches over a period of five years.
Storm had their 2007 and 2009 titles taken away, were fined $500,000 and will be forced to return $1.1 million in prize money after committing breaches of at least $1.7 million, NRL officials said in a televised media conference in Sydney.
'They had a long term system of effectively two sets of books and the elaborate lengths they have gone through to cover this up has been extraordinary,' NRL Chief Executive David Gallop told reporters.
'In doing so, they have let down the game, the players and the fans of the Melbourne Storm.'
Two of the club's senior management personnel had also been stood down and more could follow as investigations continued, Gallop said. The club will not be allowed to accumulate any more premiership points this season.
Gallop said Storm had attempted to dupe a salary cap auditor when asked to open their books last month after speculation emerged about questionable player payments, including to captain Cameron Smith.
The auditor then discovered a file that outlined undisclosed payments to players. The breaches had allowed Storm to retain players and maintain a competitive list that carried them to onfield success, Gallop added.
Skipper Smith's deal with Australian pay television provider Foxtel, part-owned by News Corp, had come under scrutiny but the skipper said the subject of the club's salary cap was 'a non-issue' when quizzed by reporters last month.
Storm's owners News Ltd, a division of Rupert Murdoch's News Corp, said they had been unaware of the breaches.
'While the penalties are unprecedented, I believe they are warranted,' said News Ltd Chief Executive John Hartigan, who described the breaches simply as 'fraud'.
Storm, who compete with soccer and Australian rules football in Melbourne's crowded sports market, are likely to lose sponsorship deals and now have nothing to play for in the remainder of the season.
The scandal may also have an impact on the new Super rugby franchise Melbourne Rebels, whose CEO Brian Waldron was the CEO at Storm from 2004-2009.
'While it's early days, he appears to be the architect of the whole shooting match,' Hartigan said.
The Melbourne Rebels had no comment but a spokeswoman denied local media reports Waldron was set to resign.
Steve Mortimer, former CEO of NRL side Canterbury, who were stripped of all 37 premiership points accrued in 2002 for systematic salary cap breaches, said the punishment was a bit harsh.
'I believe that, yes, take their points from them, still allow them to compete but ... I think they've over-reacted far too heavy,' he added.
