Lyon have not enjoyed the best of times in recent years, but their situation has gotten a lot worse in the last week. As their debts continue to mount to the tune of hundreds of millions, their men’s team has been handed a provisional relegation to Ligue 2 by the Direction Nationale du Controle du Gestion (DNCG), French football’s financial watchdog.
By Neel Shelat
There hardly ever is a dull day in the world of French football. Even though there has been no on-pitch Ligue 1 action for over a week due to the last international break of the year, followers and stakeholders alike have been kept very busy by the news of Lyon’s provisional relegation to Ligue 2. Their worsening financial situation, caused by John Textor-led Eagle Football Group’s extremely questionable management, is to blame.
Financial difficulties compounded by poor performances
It is worth noting that Lyon’s financial position was not the best even before Textor took over. Long-time President Jean-Michel Aulas oversaw the most successful period in the club’s history as they won seven consecutive Ligue 1 titles in the 2000s, but the last part of his 36-year tenure did not go so well.
Although OL never won another league title after 2008, they remained consistent competitors towards the top of the standings. In fact, Les Gones never finished outside the top five for over two decades between 1998 and 2020, which is when their recent troubles began.
From a financial standpoint, Lyon’s constant European participation as well as their top-class academy ensured their situation remained pretty stable. The big-money transfer fees they could bring in for their best talents more than offset their transfer spend, while the above-average competition revenue they received helped take care of their wage bills.
However, Lyon perhaps made a mistake in letting their player payroll nearly double between 2017 and 2020. So, right after they dropped out of the European spots at the end of the 2019/20 season, they found their annual balance sheets in red indicating net losses.
Nevertheless, this was far from a crisis. Given their stature and revenue potential, Lyon could easily have ridden through this period with some sensible decisions and measured spending. So, the real problem was that their next owner did the exact opposite of that.
Multi-club madness
When Textor completed his majority takeover of Lyon in December 2022, the club had missed out on European football for a couple of seasons. Quite simply, that meant he could not reasonably afford to go gung-ho in the transfer market as he seemingly intended to do. The DNCG were quite wary of that, as they decided to apply extra scrutiny in monitoring Lyon’s business in Textor’s first full season at the club.
On the whole, the financial health of French football clubs has been pretty poor in recent years, as Bordeaux’s demise earlier this season illustrated. So, the DNCG has been taking extra measures to monitor clubs, asking them to provide proof of funds besides just annual reports. This has been the major point of contention between them and Textor, as he has tried to use the other clubs under the Eagle Football Group umbrella – namely Brazilian title contenders Botafogo, Belgian second-tier side RWD Molenbeek and Crystal Palace – to assure the DNCG of Lyon’s financial stability. The DNCG have not been too impressed by that, as they have decided to focus on Lyon in isolation.
So, back in the summer of 2023, the DNCG went as far as blocking some transfers Lyon attempted. The most notable one among these involved Ghanaian talent Ernest Nuamah, who had been lighting up the Danish Superliga with FC Nordsjælland and attracting interest from all over Europe. After the DNCG prevented Lyon from striking a deal, Textor circumvented this by using RWDM to sign the player and then immediately loaned him across to France. This was the biggest of 16 transfers that have taken place between Lyon and an Eagle Football Group club since Textor’s takeover. While not in violation of any regulations (as of now anyway), such deals certainly do not help Lyon’s financial situation.
Of course, Lyon would go on to have a horrific start to the 2023/24 season on the pitch, finding themselves in and around the relegation zone for quite a while. Textor decided that the remedy for that was to go big in the January transfer window, in which Lyon spent well over €50 million on player transfer fees alone. Some of these players did help them miraculously turn their fortunes around to climb all the way up to 5th by the end of the season, winning a European qualification that likely prevented the DNCG from being so strict in the summer of 2024.
Textor made the most of the relative freedom afforded to him, spending near enough another €150 million in a blockbuster transfer window. While they did make 11 new signings, they only sold four players and struck some questionable deals such as signing Moussa Niakhaté for over €30 million. This profligate spending seemed puzzling enough at the time but looks all the more baffling in hindsight.
Will Lyon really be relegated?
Despite all of this mess, it is quite unlikely that Lyon will actually end up getting relegated. They will, however, need to improve their financial situation by the end of the season in order to ensure that.
There are a few ways they could go about doing that. For one, Textor is considering selling his stake in Crystal Palace, the only club he currently owns a non-controlling stake in. His share is reportedly worth around €200 million, which is well over the amount Lyon need to raise to satisfy the DNCG. However, Textor’s total debts far exceed that amount, so the best solution for him will be to solve Lyon’s problems with Lyon’s resources.
Of course, the most straightforward option would be player sales. OL have a rather bloated 29-player first-team squad, so trimming it down would make sense both to raise some money for now and cut down on the wage bill. The likes of Rayan Cherki, Ernest Nuamah, Gift Orban and Malick Fofana are all highly-rated young talents who could bring in significant transfer fees, as could Georges Mikautadze and Maxence Caqueret. However, buyers will surely attempt to lowball Lyon as much as possible with the knowledge of their desperate situation.
Besides those players, Lyon might want to part ways with some of their highest earners in order to lighten their payroll. The likes of Nemanja Matić, Saïd Benrahma, Corentin Tolisso and Moussa Niakhaté are the first names in this category, while top-earner Alexandre Lacazette will likely not get a contract extension and have to depart at the end of the season.
Some tough decisions will need to be made at the Groupama Stadium in the coming weeks and months, but Lyon only have themselves and their owners to blame for the situation they find themselves in.
(Cover image from IMAGO)
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