AC Milan have been excluded from playing in the Europa League next season after breaching UEFA's financial fair play (FFP) regulations, pending an appeal.

Milan were referred to UEFA's adjudicatory chamber in May after failing to provide sufficient evidence of their financial stability moving forward, with doubts raised after their owner, Li Yonghong, took out a substantial loan that is due to be repaid by October.

A meeting in Nyon, Switzerland, this month to discuss the case led to the adjudicatory chamber imposing the heaviest sanction yet on a club from one of Europe's top five leagues -- Spain, England, Italy, Germany or France -- and excluding Milan from its competitions.

UEFA said Milan breached the "break-even requirement" for the period from 2014-17. European football's governing body rejected both a voluntary agreement at the end of last year and a settlement agreement last month.

UEFA's statement included wording that the ban covered the next two seasons, but seeing as how they already qualified for the upcoming season's Europa League, it will only come into effect in 2018-19. The club are likely to have to go through further checks to be be reinstated if they qualify again in 2019-20.

"The club is excluded from participating in the next UEFA club competition for which it would otherwise qualify in the next two (2) seasons (i.e. one competition in 2018/19 or 2019/20, subject to qualification)," a statement said.

AC Milan were purchased by an ownership group led by investor Li Yonghong in April 2017. VCG via Getty Images

Milan announced later on Wednesday that they will appeal the decision to the Court of Arbitration for Sport in Lausanne, Switzerland.

"After taking note of the aforementioned ruling, AC Milan has instructed its legal team to appeal the decision before the Court of Arbitration for Sport in Lausanne, seeking for a prompt review of the ruling," Milan's statement said. "AC Milan fully trusts the CAS will hear its arguments and will refrain from commenting further pending the arbitration."

A final decision would be sought urgently by both Milan and UEFA since the second qualifying round for the Europa League begins on July 26. If the ruling stands, Atalanta would qualify directly for the Europa League group stage for this season instead of the qualifying rounds.

Fiorentina would consequently take Atalanta's place in the early rounds, though that process has yet to be confirmed. Fiorentina announced earlier on Wednesday that they had brought the start of their preseason training forward by two days, to July 2.

Last week, multiple reports in Italy reported that Li missed a €32 million payment on the loan used to purchase the team, which would allow the loan-holders, investment firm Elliott Management, to control the club.

In response, the Ricketts family, who bought the Chicago Cubs in 2009, expressed interest in buying a controlling stake in Milan, which Forbes values at $612 million. Multiple reports in Italy in the past week have also said American billionaire Rocco Commisso, the owner of the New York Cosmos, has been in advanced talks to purchase Milan.