The Suburbs first team, which plays in the Nelson men's division one competition, has been stripped of points from five matches in which Gagame Feni, a 17-year-old of Solomon Island heritage who has spent nearly three years at Nayland College, made an appearance.
Fifa and New Zealand Football rules prevent those aged under 18 and who are living in a country where their parents do not reside, from playing top level football.
Feni, a devastating striker who has already caught the eye of those in the Canterbury and national set-ups, has been playing without issue since arriving in Nelson.
However, his possible ineligibility came to the attention of Mainland Football, the federation that has overall control of the sport in Nelson.
It delegated the handing out of any punishment to Nelson Bays Football, who were forced to strip the team of points accumulated in games in which Feni has played, award those points to the opposition, and forfeit goals scored.
Nelson Suburbs board member Graeme Duncan said he was upset by the decision, not so much for the loss of points, but for the fact it denies Feni the right to play a sport he loves.
He said it was a decision that would have ramifications for other players living in Nelson and around the country who were from overseas.
"There must be thousands of young kids in a similar situation who by virtue of being 16 or 17 and not 18, but who are here as of right and under our wing to be educated and fostered and developed ... to give them every possible opportunity that we can, and send them home as promising young individuals," said Duncan.
"To have to say to them they can have all of that apart from soccer, it just doesn't make sense.
"It's wrong, making these kids stand on the side and watch the game that they could be playing and enjoying, it's just abhorrent."
Duncan said it was his understanding no club in Nelson had complained about Feni's eligibility and it was not a decision made by the local body, but he felt he had no option but to resign from the Nelson Bays Football district executive.
"I have to, it goes against everything I have stood up for in respect of the code.
"The last 20 or 30 years has been all about giving kids the same opportunity I had when I was playing.
"I can't be a party to a governance arrangement that does this to teenagers."
He said the club were likely to continue playing Feni, as simply allowing him to play was more important than gaining points.
"The point is it isn't that they are here simply to play football, they are here to be developed as young people and to go back much improved and developed to offer their island nation a better prospect for themselves or their nation.
"We feel that's more important than winning a local competition.
"It's about giving kids opportunities, not denying them the right to play."
Nelson Bays Football general manager Clive Beaumont said it was unfortunate, but he had no choice when it came out to dishing out the punishment.
Mainland Football chief executive Mike Coggan said the issue came to light as the federation had been working with Suburbs to try to get dispensation for Feni to play in the Mainland league.
That was unsuccessful, but it then left them in a dilemma as they knew he was not supposed to be playing at all.
"We had no choice but to invoke the ruling.
"We took the decision out of the hands of Nelson Bays Football, and had to make the decision ourselves."
He said it was unfortunate as Feni had the potential to play at NZFC level.
"But if we leave things and know they are there and we're not doing anything about them, they're very much going to come back to compromise us as an organisation," Mr Coggan said.