Historic French club Olympique Lyon is grappling with severe financial challenges that have escalated over recent years. Unable to achieve financial sustainability, the Direction Nationale du Contrôle de Gestion (DNCG)—the French football financial watchdog—has provisionally relegated John Textor’s Lyon to Ligue 2 and imposed a transfer ban for the upcoming window.

In a recent statement, Olympique Lyon disclosed a staggering financial debt of €505.1 million and acknowledged concerns raised by its auditors, who considered “issuing an inability to certify the corporate and consolidated accounts of Eagle Football Group.” Despite a meeting with the DNCG on Friday, where owner John Textor expressed optimism about resolving the issues, the regulatory body decided to enact the sanctions.

Lyon’s financial woes stem from years of mismanagement, underwhelming transfer policies, and a disadvantageous broadcast agreement. These issues have culminated in significant debts, forcing the club into a precarious situation where it have struggled to meet player wage obligations.

A similar scenario unfolded last year when Lyon faced a transfer ban in 2023. However, the new provisional relegation poses an even greater threat. If the club fails to balance its finances, relegation to Ligue 2 at the end of the season could become permanent. To avoid this fate, Lyon will have to pay part of his debt (€100M), most probably on selling high-value players during the summer transfer window and drastically reduce the payrolls.

Despite the off-field turmoil, Lyon has shown resilience on the pitch. The team sits in 5th place in the Ligue 1 after 11 games with 5 wins, 4 draws, and 2 losses, and it’s just one spot away from direct qualification in the UEFA Europa League with 7 points. This will force the team to dismantle the squad to stabilize finances, having to leave the potential prize money as a non-viable option.

What did owner John Textor say?

John Textor, the American businessman behind Eagle Football Holdings (which owns Olympique Lyon, Crystal Palace, and Botafogo, among others), had a reunion on Friday with the NDMC, and despite saying that “the meeting went well“, they still struck Lyon with this severe ban.

Before the sanction was released, Textor talked to the media, hoping to have convinced the DNCG regarding the press release. “We have no issues with going concern or financial viability,” the Businessman said, pleased to have cleared up “the confusion (arising from) the last two paragraphs at the bottom of the press release.

“They asked us questions in advance, some stemming from the confusion in the press release, and we had the opportunity to go through the numbers. We are not asking them to have a crystal ball. We must perform on all fronts, from capital increases to player transfers.

Textor also announced plans for a public presentation on Saturday to provide transparency: “It will be the same presentation I made today. I will do it tomorrow in front of a camera from our facilities in Lyon, and I will show the public exactly what we presented to the DNCG.”