Southampton were today investigating the possibility of appealing against a 10-point penalty that has effectively condemned them to relegation from the Coca-Cola Championship.

Southampton were today investigating the possibility of appealing against a 10-point penalty that has effectively condemned them to relegation from the Coca-Cola Championship.

The Football League imposed the penalty yesterday after investigating the Saints' finances since their holding company, Southampton Leisure Holdings plc, went into administration.

Southampton argued that because the club itself was not in administration they should avoid the points penalty, but the inquiry found that the club and the holding company were "inextricably linked as one economic entity" and applied their mandatory penalty.

If the Saints finish outside the bottom three they will still be relegated as the points will be taken from this season's total, while if they finish in the drop zone they will start next season in League One on minus 10 points.

Norwich City could be the beneficiaries after the South Coast club paid the penalty for their attempts to break through a legal loophole.

Southampton have the perfect incentive to begin next season in League One with a clean slate, and that means going all out in their final two games to move clear of the drop zone and lose the points as a Championship side.

They are at home to Burnley tomorrow, but it's their final game in the Championship, against Nottingham Forest in nine days' time, which is significant.

Forest are just three points ahead of City, who occupy the third and now remaining relegation place, with Charlton already relegated. But if results go City's way over the next three days, Forest may be struggling - and they would potentially face a Southampton side doomed to relegation but with plenty to fight for.

The Board of the Football League made the decision yesterday but City chief executive Neil Doncaster did not vote.

"As one of the three Championship clubs representatives on the Football League board I along with the others seven directors discussed the Southampton situation at length," he said. "I declared an interest as is proper to do so and did not vote on the Southampton question."

But the saga is set to drag on after administrators issued an angry response to the League's decision.

Their statement read: "The administrators and the club were informed of the League's intention to issue a release on the findings of the independent forensic report five minutes before its publication, leaving no time for consultation and to inform fans, players and staff.

"We are of the opinion that an incorrect conclusion has been reached. The football regulations do not apply to the circumstances surrounding Southampton Football Club."

The Saints also refuted the Football League's claim that they withdrew their co-operation towards the investigation.

The statement concluded: "Both the club and the administrators are now considering their positions and expect to launch an appeal."

Football League chairman Lord Mawhinney acknowledged the club has the right to appeal.

He said: "There is an appeal mechanism and it's up to Southampton to decide whether they want to appeal and on what basis."