Lyon handed provisional Ligue 1 relegation and transfer ban over financial situation

Lyon has been given a temporary drop to Ligue 2, the second tier of French soccer, and will face a transfer restriction after a review of their financial situation.

The Direction Nationale du Controle de Gestion (DNCG), the authority in charge of monitoring the financial activities of French football clubs, has notified Lyon, who claimed the French championship for seven consecutive years from 2001-02 to 2007-08, that they need to significantly enhance their financial standing before the season concludes, or they will face mandatory relegation from Ligue 1. Additionally, the club is currently prohibited from registering any new players.

In July, Bordeaux was stripped of their professional status and dropped two divisions down to the fourth tier due to a decision by the DNCG.

In 2023, the DNCG demoted Sochaux to the third division. However, clubs have the right to challenge any final ruling. For instance, Nancy successfully appealed against the DNCG's decision to drop them down two additional levels and were restored to the third division for the 2023-24 season.

John Textor, the owner of the Eagle Football Group, which holds a 77 percent share in Lyon as well as significant stakes in Premier League team Crystal Palace, Brazilian team Botafogo, and Belgium's RWD Molenbeek, expressed that he is not worried about Lyon's position in the top division of French football. He is confident that the club's financial situation will meet the requirements set by the authorities before the deadline in May.

The latest financial report from Eagle Football Group, released this month, revealed that their total debt has risen to €505.1 million (£422 million), an increase from the previous €458.5 million (£382.8 million).

Textor, the 59-year-old who proposed a bid for Everton earlier this year, mentioned that his group's financial records indicate "substantial incoming cash flows." He stated confidently that "there's absolutely no way the club won't be able to bridge the gap."

The businessman from Florida purchased Lyon in December 2022 and stated on Friday, prior to the DNCG's announcement, that the club "will not part ways with the players beloved by fans or our top talents." He plans to hold a press conference on Saturday, November 16, where he will address the club's financial situation.

Textor believes that the money earned from selling other clubs in the Eagle Football Group, like Botafogo, could be used to support Lyon's financial situation. Additionally, funds from selling his 45 percent ownership in Crystal Palace could also contribute to this. In May, he hired the investment banking firm Raine Group to help find a buyer for Eagle Football's share in the south London club.

Botafogo is currently leading Brazil's Serie A, aiming for their third league title, their first since 1995. Additionally, they are set to compete in the Copa Libertadores final for the first time, facing off against fellow Brazilian team Atletico Mineiro. If Botafogo secures a victory in this South American tournament, they will earn a spot in the newly-expanded FIFA Club World Cup, which will feature 32 teams and be held in the United States next summer.

The DNCG's decision could push Lyon to think about selling players in the January transfer window. This includes Belgium winger Malick Fofana, who is 19, and local talent Rayan Cherki, 21, both of whom would attract interest in the market.

Textor mentioned that if they decide to sell skilled players, they will bring in new ones to fill those gaps. He emphasized that for Lyon, not securing a spot in the Champions League for the 2024-25 season would be considered a setback.

Lyon, which is participating in this season's Europa League, currently sits in fifth place in Ligue 1, having earned 18 points from 11 games. They will resume their Ligue 1 campaign on November 23 with an away match against Reims.

Further contributions by Matt Woosnam.

Understanding John Textor's acquisition of Lyon and its implications for Palace.

(Valerio Pennicino – UEFA/UEFA with permission from Getty Images)