The Italian giants were keen to speak with UEFA where they intended to receive more time to comply with financial fair play regulations for the upcoming campaign.
UEFA and AC Milan have found an agreements after lengthy discussion, which will see them removed from next season’s Europea League.
The Court of Arbitration confirmed on Thursday morning that they have sanctioned the ban which bodes well for two other Italian clubs.
Roma will now qualify for the group stages while Torino will be placed into the qualifiers at Milan’s expense.
The action taken from UEFA finally shows some authority from the governing body, and will deter other clubs from breaking rules in the future.
Manchester City are currently being investigated for similar potential breaches which could seem them banned from the Champions League.
Full CAS statement: “The Court of Arbitration for Sport has issued a Consent Award embodying the agreement reached between AC Milan and the Union of European Football Associations (UEFA) concerning breaches of the UEFA Financial Fair Play Regulations by the Italian club.
“AC Milan is excluded from participating in the UEFA club competitions of the sporting season 2019/2020 as a consequence of the breach of its FFP break-even obligations during the 2015/2016/2017 and the 2016/2017/2018 monitoring periods.”
On the plus side, it will allow new manager Marco Giampaolo to focus primarily on the club’s domestic goals.
The veteran boss joins AC Milan from Sampdoria and will begin life in the San Siro dugout on July 1.
Gennaro Gattuso was sacked at the end of the season following the club’s failure to qualify for the Champions League.
Giampaolo could bring former player Lucas Torreira to Milan when he takes over the reigns, with the Uruguayan keen on a return to Serie A.