Peninsula Old Boys, a D1 Section club, has been found guilty of paying its playing-coach in 2006.
The VAFA board has relegated the Pirates to D2 for 2009 after finding "that Mark Glenn did allegedly infringe his amateur status when playing 10 senior VAFA matches in 2006 as a playing coach".
Peninsula lost to Oakleigh in the 2006 D2 grand final by 67 points but by defeating Aquinas in the preliminary, it was promoted to D1.
But Aquinas made last year's D2 grand final and president Marcello Tarulli said it didn't matter as they had now been promoted.
A non-playing coach is allowed to be paid but no players are allowed to receive remuneration.
Throughout this year the VAFA has been investigating rumours of payments to clubs in a variety of sections.