In November 2024, Olympique Lyonnais, the seven-time Ligue 1 champion, had been handed a provisional relegation to Ligue 2 by DNCG, the organization responsible for monitoring and overseeing accounts of professional association football clubs in France.
To think that such a decorated club like Olympique Lyonnais, who was once at the top having won seven successive Ligue 1 titles along with eight Trophées des Champions, five Coupes de France and also a seventeen times Champions League participant, is in such a perilous situation of having been given a provisional relegation notice underlies the volatile state of European football today.
Olympique Lyonnais (OL) has been under the watchful eyes of DNCG as their debt rose over €500mn and in addition to the relegation, they were also hit with a recruitment ban and have their payroll supervised.
In this blog, we look at the possible factors leading to the present state of affairs at Olympique Lyonnais and the road ahead for them.
The Pandemic Effect
From the record run of seven years, where OL were the league champions, till 2018/19, they were mostly in the top three which in football business parlance would translate to playing in the Champions League and that meant additional revenues. But since 2019/20, there has been a period of volatility at the sporting end. It was also the year when pandemic struck and many sporting properties were impacted profoundly. Olympique Lyonnais was one of them
The season was ended abruptly by LFP and league positions were finalized based on their rankings at the time of league’s suspension. OL was placed 7th and missed out Champions League. Along with a reduced revenue due to suspended matches, losing out on CL revenue was a double blow. The graph shows the club’s decrease in CL revenue over the last 4 years.
It was further compounded when Ligue 1 broadcaster partner Mediapro stopped paying instalments on its €780million annual TV rights deal forcing the league to opt for Canal+ with lesser revenues. OL could never recover after that. That also reflected on the managerial position. Since 2019 till now, in a span of 5 years Olympique Lyonnais was helmed by 6 managers.
Increasing Debts
As per data sourced from Swiss Ramble, Olympique Lyon’s gross debt rose substantially from €227mn in 2019/20 to €458mn in 2022/23 that is a 102% increase reaching over €500mn presently as per multiple reports. This is largely because of the finance leases payments. The fact that club’s gross debt is the highest in French League, well ahead of other clubs is the major bone of contention with the French authorities. Although towards the end of 2023, OL reached an agreement with a group of investors to refinance the substantial majority of its debt (€320mn) on a long-term basis, but that doesn’t seem to have satisfied the authorities.
Wages to Revenue Ratio
Since the 2019/20 season, OL’s wages / revenue ratio is on the higher side, that is over 70% as is demarcated by UEFA and an acceptable level. In the 20/21 season it went over 100%, was controlled in the following season but shot back again in the 22/23 season reaching at an alarming 79% level.
New Management and Present Day Crisis
In December 2022, American investor John Textor bought a controlling stake in the club in a deal valuing Lyon at €884m. The ambitions were lofty with pledges of “spending” and “going after PSG”. Textor wanted to establish a multi-club ownership structure to induce operational synergies. His holding company, Eagle Football, also has investments in a few other football clubs making it a part of multi-club ownership structure . Some of the other clubs under Eagle Football Holding:
- Crystal Palace: around 46%.
- Botafogo, Brazilian Serie A.
- RWD Molenbeek: Belgian club.
In the winter transfer window, OL did some aggressive selling and as much as ten first team high-earners departed and according to L’Equipe, it freed about €1.7mn (excluding charges) in their monthly wage bill. That still isn’t enough for now and going forward they will have to drastically overhaul their expenditures. One saving grace could have been a Champions League (CL) participation which now doesn’t seem possible. With just one game to go, OL currently sits 7th and a win in their last match would not be enough to secure a CL spot.
Add the media rights crisis surrounding French football, the situation is indeed gloomy. Although owner John Textor had insisted that the club won’t be relegated to Ligue 2 and said the club needs to overcome a deficit of around €100mn by the end of the season. At this moment, Textor’s options are very limited with player sales from his club before June or selling a 45% stake in Premier League team Crystal Palace to help manage finances.
In Conclusion
The volatile nature of present day football is a reality. While there are good chances that Olympique Lyonnais might not be able to salvage the relegation situation, that does reiterate the fact that any disturbance in revenue streams has a mighty effect.
A strong and effective management is becoming a must for skillfully operating today’s football club.
