Major League Soccer has handed Inter Miami CF a $2 million fine -- the stiffest in MLS history -- over violations of the league's salary budget and roster regulations.

Along with the $2m fine to the club, MLS levied a reduction in allocation money of $2,271,250 spread out over the 2022 and 2023 seasons. With a total available spend of $19.155m across those two campaigns, the allocation money penalty amounts to 11.9% of Inter Miami's salary budget during that time.

The league also issued a personal fine of $250,000 to Inter Miami managing owner Jorge Mas.

MLS announced in March that it would be investigating the signing of midfielder Blaise Matuidi over whether it complied with the league salary budget and roster guidelines.

The investigation found violations involving the player categorizations of Matuidi and former Miami defender Andres Reyes, as well as the underreporting of salary budget amounts for players Leandro Gonzalez Pirez, Nicolas Figal and Julian Carranza. None of Inter Miami's players were the subject of the investigation, committed any violation, nor were aware of the violations.

While the fines are significant, the allocation money penalty amounts to a major blow to Inter Miami, and should significantly impact the team's ability to field a competitive roster.

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The penalties dwarf the previous record fine of $150,000, which was levied back in 2015 to Real Salt Lake owner Dell Loy Hansen for comments he made about ongoing CBA negotiations.

In addition, former Miami sporting director/COO Paul McDonough, who held that job in 2020 before taking on a sporting director role at Atlanta United FC this season, has been suspended by the league through the 2022 season. He has subsequently been fired by Atlanta.

"The integrity of our rules is sacrosanct, and it is a fundamental principle of our league that our clubs are responsible for adhering to all league regulations," said MLS Commissioner Don Garber. "Our rules will not be compromised. These sanctions reflect the severity of Inter Miami's violations, should encourage complete cooperation by all parties in future investigations, and will serve as a deterrent for clubs from violating roster rules."

In a statement, Mas said: "Inter Miami CF acknowledges that the Club violated Major League Soccer's roster rules in our first season.

"We have worked closely with MLS to address these issues and have made significant changes in our management structure. Following our inaugural season, we took a deep look at our soccer operations leadership group and made decisions that not only strengthened our internal roster compliance measures, but also better positioned us to build a sustainable, long-term competition strategy with the hiring of Chris Henderson as Chief Soccer Officer and Sporting Director in 2021.

"Inter Miami is an ambitious Club with big aspirations. We believe our fanbase, market and ownership group propel us to be one of North America's most-followed fútbol teams in the world. We are committed to supporting our team and building a roster we are proud of."

A source with knowledge of the situation said that the league is also demanding that Inter Miami come up with a plan to ensure compliance with the league's salary budget rules. That plan is due to be delivered to MLS by May 31.

MLS has long utilized a salary budget in order to limit costs on player compensation. These amounts are collectively bargained with the MLS Players Association. The total spend allowed for 2020 is $9.225m, and rises to $9.325 in 2022 and then $9.83m in 2023. The bulk of the salaries for Designated Players do not count against the salary budget, but teams are limited to three DPs per season.

The league announced its investigation of Inter Miami back in March, divulging that Matuidi's total compensation should have had him classified as a Designated Player. The investigation determined that this was because in addition to signing a contract, Matuidi signed a marketing agreement which added to his total compensation. Such agreements aren't unusual, but MLS rules stipulate that such agreements must be reported to and approved by MLS for the purposes of ensuring compliance with the salary budget. That reporting/approval wasn't done. When the club subsequently signed forward Gonzalo Higuain later in the season, that essentially gave Miami four DPs, one more than the rules allow.

But the investigation revealed that was by no means the only violation. In addition, the total compensation for Reyes -- who was on loan from Colombian side Atletico Nacional at the time -- also pushed him into the Designated Player category, meaning Miami actually played part of 2020 with five DPs. Reyes is now with the New York Red Bulls.

The league's investigation also found that the salary budget charges for Gonzalez Pirez, Figal and Carranza were also underreported, thus giving Miami yet another advantage compared to other teams in the league.

As the investigation began, a source with knowledge of the league's thinking told ESPN that McDonough wasn't a target. The source clarified that the situation changed as more information became available. McDonough may petition the commissioner's office for reinstatement as early as March 1, 2022.

Mas' fine came about because he had the ultimate authority over player contracts. MLS added that minority owners Masayoshi Son, chairman Marcelo Claure and current president of soccer operations David Beckham weren't sanctioned because the investigation concluded that they weren't involved in the effort to hide the actual salary budget charges from the league.

"As managing owner of Inter Miami, Mas approved all player-related agreements and transactions," the league's statement read. "He was ultimately responsible for making sure Inter Miami had sufficient controls and protocols in place to ensure compliance with MLS rules. While Mas was cooperative with the league's investigation and importantly, alerted league investigators to critical information regarding undisclosed player-related agreements, investigators found that he failed to disclose his knowledge of the Matuidi violation at the appropriate time required under MLS rules."