Breaking News: Olympique Lyon relegated to Ligue 2 following financial violations

Lyon relegated to Ligue 2 over financial issues despite appeal; club cites improved cash from Crystal Palace sale. Player exits expected.

Olympic Lyon has been relegated to the second tier of French football, while the club insists on appealing the decision, how do they keep hold of top players if they don't win the appeal? (Photo credit: BBC)

The French Professional League announced on Tuesday night that seven-time champions Olympique Lyon have been relegated to Ligue 2 following financial troubles.

Club owner American businessman John Textor and Mickael Gerlinger, the club's director of football, were interviewed by the National Directorate of Management Control (DNCG), the French financial regulator responsible for monitoring the accounts and financial health of all professional clubs.

In November, the DNCG provisionally relegated Lyon because of a €175 million ($203.34 million) debt and no clear plan from the club on how to reduce it. A transfer ban was also imposed in the January transfer window.

The club rejected the decision in a statement on Tuesday and said it had worked closely with the DNCG, satisfying all their requests.

"Olympique Lyonnais takes note of the incomprehensible decision handed down by the DNCG this evening and confirms that it will appeal immediately," the club said.

"With demonstrated funds and sporting success that has earned us a place in European competition two years running, we sincerely fail to understand how an administrative decision could relegate such a great French club."

The decision comes one day after Premier League side Crystal Palace announced that New York Jets owner Woody Johnson signed "a legally binding contract" to buy Textor's shares. Textor sold his 43% stake in the London club for $254 million.

"Thanks to the equity contributions from our shareholders and the sale of Crystal Palace, our cash position has improved considerably, and we have more than sufficient resources for the 2025/26 season," the Lyon statement added.

In October, Textor's Eagle Football Group revealed debts totalling around $574.85 million, raising concerns about the French club's financial stability. Textor's proposal to transfer funds from Botafogo, another club he owns in Brazil, to Lyon to cover the debts was denied.

However, Lyon bosses were confident on Tuesday that they would be able to satisfactorily answer all questions and provide reasons why they should not be relegated to Ligue 2.

The 59-year-old Textor gave a positive assessment of their financial position before the decision was announced.

"You can see from the contributions of our shareholders that we have invested new capital, not only for the DNCG but also for our UEFA licensing process. Not to mention the good news of the sale of Crystal Palace. Our liquidity situation has improved considerably," he told reporters earlier on Tuesday.

Following the relegation of Lyon from Ligue 1, clubs are expected to perch around their assets, as most of them won't want to go down with the club. How many of them will leave in the wake of this challenge?