One of the most decorated and successful French football clubs Lyon could face relegation to Ligue 2 next season after being handed a provisional relegation by the National Directorate of Management Control (DNCG).
Following a hearing last Friday, Lyon have been ordered to remedy its current financial outlook as the club has debt in excess of €500m. The seven-time Ligue 1 winners have also been hit with a player transfer ban for the January transfer window as the DNCG will also oversee the management of player wages.
Before the audit last week, the DNCG analysed Lyon’s financial health in July and ruled that it was not sufficient for financial guarantees.
This was met with backlash from Lyon’s majority owner John Textor, who stated last summer that new capital in the club was not necessary as he demonstrated proof of funds in deposits of €60m.
Despite this, Textor met with DNCG officials last Friday to outline the punishments the US businessman faces with the current situation Lyon finds itself in.
In order to avoid relegation to France’s second-tier league, Lyon will have to raise new funds which may come in the form of gaining transfer fees for some of its best players, such as Rayan Cherki and Alexandre Lacazette.
Textor could also sell off his shares in Premier League club Crystal Palace in which he owns a 45% stake. The US owner has reportedly been shopping his share in the English football club which could be helped to raise funds for Lyon.
However, this could raise fresh doubts regarding Textor’s reported interest in buying a majority stake in Everton if a large sum of the share sale funds from Crystal Palace were to be used to offload Lyon’s debt.
In a bid to reassure Lyon fans, he valiantly defended the club insisting that “we will not be relegated, there is no chance”.
He added: “I know that our situation makes some sceptics. I prefer the Premier League system which punishes clubs differently.
“We have resources that go well beyond the club. Even if we fail on all our global initiatives, of €700m, our owners will not let the group sink. There is no chance of being relegated.”
The potential relegation of Lyon from Ligue 1 is similar to the financial troubles Girondins Bordeaux found themselves in recently, who were subsequently relegated to the four-tier of French football after filing for bankruptcy.
A big French club in their own right, Bordeaux have won the French league title six times in its history, most recently in 2009. The financial troubles of both Bordeaux and Lyon are indicative of the last several years in French football.
With the COVID-19 pandemic causing up to eight Ligue 1 clubs filing for bankruptcy due to the league ending effective immediately since the league’s closing in March 2020 – unlike many other European leagues that eventually restarted the following summer – it greatly impacted matchday revenues.
The country’s football organisation, Ligue de Football Professionnel (LFP) were also not able to generate interest from broadcasters last summer at the €900m valuation of its current broadcasting rights.
In the end, DAZN agreed a €400m deal with LFP over the next five years, with BeIN Sports also paying up to €100m as part of the same broadcast deal, significantly lower than the LFP’s valuation.
As club’s share revenue from the broadcast deal, all Ligue 1 clubs will be earning 11% less than it did from the previous broadcast deal.
