AC Milan
File photo of AC Milan coach Ivan Gennaro Gattuso.Emilio Andreoli/Getty Images

Serie A giants AC Milan have been handed a one-year ban from European football by the Uefa for breaching Financial Fair Play Regulations.

The seven-time European Cup winners had qualified for next season's Europa League after finishing sixth in the domestic league last season.

The Italian giants, according to an official statement on Uefa's website, had failed to meet the "break-even requirement". They had spent over £200 million on transfers in the last summer window after being taken over by Chinese consortium Rossoneri Sports Investment Lux, headed by Li Yonghong. 

However, they have the right to appeal against the ban to the Court of Arbitration for Sport.

"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 on Uefa's official website read.

"This decision may be appealed to the Court of Arbitration for Sport, in accordance with Article 34(2) of the Procedural rules governing the UEFA Club Financial Control Body, as well as Articles 62 and 63 of the UEFA Statutes."

The Uefa had said there remained uncertainties in Milan's financial affairs and referred the case to Adjudicatory Chamber of the Club Financial Control Body, which gave the ruling on Wednesday.

Notably, the legendary Italian club, which was owned by Italian prime minister Silvio Berlusconi from 1986, was sold to the Chinese consortium in April 2017.

Li had taken a $212 million loan to complete the purchase of the Serie A club from US private equity fund Elliott, according to the Reuters. The investigatory body expressed concerns about the refinancing of the loan, which is expected to be paid back in October 2018. 

The San Siro club went on a spending spree amid questions of financial stability of the Rossoneri Sports Investment Lux. They brought on players of the likes of Porto forward Andre Silva, Juventus defender Leonardo Bonucci, Villarreal defender Mateo Musacchio, and Wolfsburg full-back Ricardo Rodriguez.

Milan though have maintained that they are on course to meet their business plan targets presented to Uefa, according to the BBC.

Under UEFA regulations, any European football club spending more than its generated revenue faces possible sanctions, including, in certain circumstances, a ban from playing.