7-time champions Olympique Lyons relegated to Ligue 2
DNCG relegated Olympic Lyon as they were not satisfied with how they handled the debt of 175 million Euros that they had accumulated.
The once high and mighty French football club, Olympique Lyonnais, is heading for the second-tier league. The news sounds unbelievable, but the fact is that they have been in financial trouble for quite a while, and they have not managed to resolve it to the satisfaction of the financial monitoring body of DNCG. This is shocking throughout, from the fans to the bettors to the top Asian and European bookmakers. Not so much for the fact that a team owes money. It’s more about the amount.
It begun in November
La Direction Nationale du Contrôle de Gestion (DNCG) is the ruling body of French football that regulates the money of the clubs to make sure that everything is fair and above board. During the last audit they conducted, they found out that Olympique Lyon had a deficit of 175 million Euros. And the first question comes naturally. How did they allow it to climb up to this level? However, the word is that this is just the surface. The reality is that the aforementioned amount may go up to as much as 500 million! Debts settled in installments do not count as direct.
When the debtor defaults, they also become direct and are therefore added to the total. And the more time it takes to settle, the more the interest accumulates, and the greater the amount becomes. That’s how they got to this high amount.
In any case, when the initial discovery was made, the decision to relegate the club was also taken. However, the club owner, John Textor, was given time to remedy the situation. The measures he took were deemed not enough. Hence, the confirmation of the relegations became a reality.
Were eight months enough?
The reaction of Eagle Football Group (the parent company) amounted to the following steps:
- John Textor sold his shares at Crystal Palace and applied the funds against the debt
- OL Reign was sold
- OL Vallée Arena was sold
- Other assets of the club were liquidated
All of the above managed to reduce the loss by 74%. However, 161.7 million Euros were still left as a result of short-term obligations, while there is also an amount for tax returns resulting from the sales of the assets described above. The bottom line is that the debt would continue to climb. Not at the same rate as before, but the demands would continue to mount. Therefore, the decision to confirm the relegation seemed justified. Nevertheless, the club issued an announcement stating that they would appeal the decision.
The issue is much deeper
Typically, to seduce top-class players to join clubs, club owners must reach deep into their pockets. And the default outcome is that teams that do not have strict control will go into huge deficits. The hope is to cover those through increases in the prices of the tickets, higher TV broadcast rights, sales of talented young players, etc. The fact is that it is not the first time that conditions have led budgets completely off. The greatest example is what happened during the COVID pandemic. All financials were simply thrown into the trash cans. And it is well-known that recovery from such losses takes a lot more time. And sometimes there is no recovery at all.
Thankfully, since they came up 6th in Ligue 1, they have secured a position in next season’s Europa League. That will send quite an amount of money their way, which will reduce the deficit even more. Some of that money will also result from the wagers that people place when they open an account via agent. So, if you want to support this club to stay in the big leagues, this is your chance.
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