Parramatta has been hit with a $525,000 fine and is facing the prospect of losing competition points for breaching the NRL salary cap in 2014.The NRL revealed on Thursday the Eels overspent by more than $400,000 last season, and now have until February 29 to undergo an independent review of the books and implement changes from it.
If the NRL is not satisfied with Parramatta's progress by that date, the club will start the 2016 season minus four points.
NRL chief executive Dave Smith said the league had to take a harsh stance on such breaches.
"The salary cap is one of the reasons we have the closest sporting competition in Australia," 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."
When fronting the media on Thursday afternoon, Smith said the league would endeavour to support all clubs in similar situations but that an extended period of mismanagement from the Eels forced the NRL's hand.
"We're trying to find a balance between a punitive punishment and trying to encourage the club to get stronger.
"Nobody wants to take competition points away, but we require certain changes and the changes are designed around an independent person making an assessment.
"This didn't go wrong overnight, this has gone wrong over a number of years."
While the majority of the club's overspending came from the second-tier bracket, breaches were found across all four levels of the cap, including the under-20s - something Smith descried as "unprecedented in our experience".
Eels coach Brad Arthur said prior to Thursday's revelation changes needed to be made to the game's second-tier salary cap of $440,000.
"I'm not sure what the best answer is," Arthur said.
"But it does make it difficult when you've got people training, with a view of they want to put pressure on your top squad to play in the NRL.
"It's a little bit disheartening on them knowing the opportunities are limited because of your salary cap."
Despite its salary cap troubles Parramatta has already announced the big-name signings of Kieran Foran and Beau Scott for next season.