Northern NSW Football issued Newcastle Olympic with a show cause notice on Tuesday over a post-match incident in which Broadmeadow's Uruguayan goalkeeper Cesar Serpa was allegedly called a "f---ing terrorist".
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Audio of the brief exchange as the teams left the pitch was caught at the end of Bar TV footage of the round 14 NPL men's game on June 4, which Magic won 3-1 at home.
The words "you f---ing wannabe, you f---ing terrorist" are clearly heard.
A NNSWF spokesperson confirmed on Tuesday that they "are investigating an incident after the NPLM NNSW match between Olympic and Magic.
"NNSWF sent a show cause notice to Olympic today. The club have seven days to respond. NNSWF won't comment further until the investigation has concluded."
Broadmeadow secretary Stephen Pichaloff said his club had not lodged a formal complaint about the "comments made to our goalkeeper at the end of the game" but he had made NNSWF aware of them. Pichaloff said his club had also communicated with Olympic, who had responded.
"We are contemplating our next actions," Pichaloff said.
"We've listened to the audio and there's no denying the fact".
Olympic secretary Con Gounis was contacted but did not want to comment on a judiciary matter still under investigation.
The show cause notice was sent the same day Olympic drew a home game against Edgeworth for their Australia Cup clash on Wednesday, June 21.
Broadmeadow also drew hosting rights, and play Maitland on the night. The two winners move into the national round of 32 draw for the cup and also meet in the revived State Cup final.
Olympic downed Northern Rivers club Alstonville on the road on Saturday to make the final four, but it was not without controversy.
They scored in the 88th and 90th minutes to get the 2-0 win and then escaped penalty for breaking the cup's rules on substitutions.
NNSWF, who administer the region's preliminary rounds of the cup, confirmed on Tuesday that "match officials initially permitted Olympic to use an extra substitution window.
"This was noticed within 90 seconds, the player was removed from the field and cautioned. No further action will be taken."
Olympic drew 1-1 with Edgeworth in the NPL this season, while Maitland and Broadmeadow finished 2-2 in their league game.
Magic downed Bangalow 5-1 and Maitland beat Belswans 6-0 in the cup on Saturday. Edgeworth defeated Jaffas 3-1 in extra-time. All three winning teams came through unscathed.
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