Manchester United manager Sir Alex Ferguson said he questioned the Premier League's decision.
"You are allowed to have 25 players," said Ferguson, who is expected to make a significant number of changes to his own starting line-up for Saturday's FA Cup tie at Southampton.
"They ask you to name them. They don't ask you to name your 11 and 14 substitutes. The rules are there."
Blackpool chairman Karl Oyston called the fine "unjust" and said the club could appeal against it. He also stated that he would ensure Holloway did not follow through with his threat to leave Bloomfield Road.
"There is no way I would countenance Ian resigning and I will do everything in my power to make sure that doesn't happen," Oyston told BBC Radio 5 live.
"I think he is disappointed the same as we all are because on the face of it, it is an unjust fine and seems to lack reason.
"The Premier League set their criteria that you have to name a 25-man squad ahead of the season and effectively they then come back in a scarily big brother-type way and tell you those players aren't good enough or the manager hasn't got the right to name the team that he wants to name."
Speaking after the match at Villa Park, Holloway had admitted that making such wholesale changes may have looked like a "crazy" move but he said his hand was forced by the busy Premier League calendar.
"We've got four games in 12 days and the lads I've played every week are struggling to keep up the level," he stated.
Holloway threatened to resign in 2010
"Let them try and fine me, it's an absolute disgrace. I'll show the Premier League. We were a credit to football, and let the Premier League try to tell me otherwise."
Premier League rules stipulate that all clubs must select from a 25-man squad.
Holloway argued that because he had fulfilled this obligation, a case for fielding an understrength side could not be mounted against him.
However, the Premier League said it considers this an extreme case.
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