French club that took Crystal Palace’s Europa League place announce huge losses

 Lyon, who took Crystal Palace’s place in the Europa League after Uefa ruled the latter had broken multi-ownership rules, have announced massive annual losses of £176m.

Those losses made by the French club, currently top of the Europa League table, come in spite of £62m of player sales, including that of Rayan Cherki to Manchester City, without which the club would be in even graver trouble.

Lyon’s total debt stands at £454m and its new principal power Michele Kang, an American investor, has been fighting to keep the troubled club alive. Its total revenue for the year, excluding player sales, was £142m.

Kang took control in June from John Textor, another American, whose former stake in Palace caused Uefa to rule in the summer that the Premier League club had broken multi-club ownership [MCO] rules and had to drop into the Conference League. Textor has since sold his 43 per cent stake in Palace, but not before what Uefa ruled was the deadline for owners with a significant interest in two clubs competing in a single Uefa competition to place one or other in a blind trust.

The legacy of Textor’s ownership of Lyon looks stark now, with the club having sold major assets during his time in charge, including an indoor arena, and a majority stake in the women’s team, OL Féminin. That was Kang’s original investment in Lyon. In July, Kang loaned £76m to the club, with an additional £26m bank facility, to satisfy Uefa and French regulators that the club could complete the season.

Lyon remain under scrutiny of French regulator

The losses were announced by the club’s controlling parent company Eagle Football Group, which was assembled by Textor and nominally includes the Brazilian club Botafogo and the Belgian second-tier club RWDM Molenbeek. Eagle is now divided with Kang in control of Lyon, and Textor is still in control of Botafogo. Although the Brazilian media have reported significant financial problems at the club.

In the Eagle accounts detailing Lyon’s massive losses for the year ending June 30, the club acknowledges that there are claims from Botafogo that Lyon owes money to the Brazilian club via intra-company loans. Lyon says it rebuffs those claims, which are being made by Textor.

In July, Telegraph Sport revealed that Eagle Football Group’s total debt across the three clubs stood at £880m. Despite the funds generated by Textor’s sale of his stake in Palace to US billionaire Woody Johnson, for around £155m, it is likely that the total debt has climbed since then – chiefly as a result of some of the high interest charges on portions of it.

When Palace and Lyon were judged to have been part of an MCO, with Textor at its centre, Uefa rules dictated that only one could play in the Europa League. Palace, the FA Cup winners, lost out by virtue of finishing lower than Lyon in their respective domestic leagues. Lyon had finished sixth in Ligue 1. Nottingham Forest took Palace’s Premier League place in the Europa League.

Lyon remain under scrutiny from the French financial regulator Direction Nationale du Contrôle de Gestion [DNCG] and Uefa. In July, Lyon were fined €50m (£43m) by Uefa of which €12.5m was payable immediately and the rest contingent on whether Lyon met financial controls over four years. The DNCG eventually ruled against relegating Lyon to Ligue 2 because of financial breaches which, if confirmed, would have seen the club ejected from the Europa League.