Knobel, who is yet to make his debut, was suspended for four games after an AFL investigation.
The AFL said the Suns reported the "highly offensive" slur and Knobel admitted to the incident, which happened last Saturday during their VFL game against Brisbane.
The league added the ban was consistent with other cases where the player had self-reported, showed remorse and apologised.
"Homophobia and homophobic language have absolutely no place anywhere ... the incident demonstrates that there is still more work to be done," AFL chief operating officer Tom Harley said.
Knobel said in a club statement he accepted the repercussions of what he had done.
"I have to take responsibility for my actions which were unacceptable. I understand the severity of what I said and the impact those comments have on a wide range of people," Knobel said.
"I have offered my apologies to the Brisbane player and would like to extend my sincerest apologies to those who have been impacted by my comments, particularly those as part of the LGBTIQA+ community.
"It is not what I stand for as a person and I understand that I now need to prove that through my actions moving forward."
Suns chief executive Mark Evans said they were extremely disappointed, but would support Knobel.
It is the latest in a succession of similar incidents and the AFL Players' Association said more needed to be done to fix the problem.
"As it stands, the game hasn't done the work to develop a more holistic solution through meaningful engagement with the LGBTIQA+ community, bespoke education, as well as an appropriate disciplinary process," the AFLPA said in a statement.
Earlier this year, Brisbane Lions draftee Koby Evans received a four-game ban for directing a homophobic slur towards a VFL opponent.
That came less than a fortnight after the league sacked its appeals board chairman Will Houghton after he said racist, sexist or homophobic language was "commonplace" in the AFL.
Houghton made the comments while adjudicating a case involving St Kilda's Lance Collard.
Collard, who received a six-game ban two years ago for using homophobic language, was initially handed a seven-week suspension for another incident this year before it was reduced to two weeks on appeal.
The 21-year-old claimed he didn't use a homophobic term in this year's alleged incident.
Adelaide's Izak Rankine was banned for four matches last year for using homophobic language, missing the Crows' finals series.
Untried Sydney defender Riak Andrew (five matches) and West Coast player Jack Graham (four) were also suspended last season.
In 2024, ex-Port Adelaide player Jeremy Finlayson was handed a three-match ban, and Gold Coast midfielder Wil Powell was suspended for five matches.
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