Why Did Lyon FC Get Relegated to Ligue 2?

Olympique Lyonnais, one of the top clubs in French football, was officially demoted to Ligue 2 on June 24, 2025. The news definitely shocked the entire European football circuit after a final ruling by France's financial watchdog, the DNCG (National Directorate of Management Control). Lyon FC, who have won the Ligue 1 title seven times, dominated French football from 2002 to 2008 under American owner John Textor, before eventually falling victim to severe financial mismanagement.

This Lyon FC relegation marks the conclusion of the club's 36-year straight run in France's top division, and also qualifies as among the most amazing plunges in modern football history. Originally given a provisional relegation in November 2024 owing to rising debts over €505 million, Lyon FC was unable to convince the DNCG of its improved financial condition. Lyon fans, who had been waiting for the 2025-26 season to start, might have been devastated by the recent off-field development. Lyon FC finished sixth in Ligue 1 last season and also reached the Europa League quarterfinals.

Many view the relegation as a cautionary story about foreign ownership and financial viability at football clubs, hence causing extensive worry all across French football. The league itself is in a never-before-heard situation of losing one of its most famous teams. With Lyon FC relegated now, the other Ligue 1 clubs will now get greater scrutiny for their own financial policies.

The Reason Behind FC Lyon Relegation to Ligue 2

Lyon FC relegation follows terrible financial mismanagement that began accelerating after December 2022, when John Textor's Eagle Football Group purchased 77% of the club. From €458 million to over €508 million in 2024, the club's debt burden reflected a terrible monetary situation that violated the strict financial fair play regulations of French football.

First hitting Lyon in November 2024, the DNCG monitors the finances of French professional football teams closely to prevent management collapse. The punishment was first a temporary relegation to Ligue 2 and a total transfer ban for the January 2025 window. The decision of the financial authorities was based on Lyon's insufficient financial guarantees and lack of evidence of long-term viability. Financial issues for Lyon stemmed from Textor's multi-club ownership strategy, which the DNCG struggled to properly evaluate. The American businessman's Eagle Football Group has developed a complex financial structure that French authorities found challenging to assess, in addition to interests in Crystal Palace (Premier League), Botafogo (Brazil), and RWD Molenbeek (Belgium).

The DNCG remained dubious of the assurances given, even though Textor contended the multi-club model offered financial stability. Falling television revenues in French football and the costs related to Textor's ambitious European initiative made the club's financial problems worse. Even with outstanding player sales, including Rayan Cherki's €42.5 million transfer to Manchester City and other departures totaling nearly €30 million, the demands of the DNCG proved inadequate.

How the French Club Would Battle the Situation?

Having the legal right to challenge the decision, Lyon FC swiftly declared their wish to appeal the DNCG's relegated status. The appeals procedure will be controlled by the current legal system of French football, under which teams might provide more arguments and evidence to overturn executive rulings. Nancy was once reinstated to the third division after appealing a DNCG relegation; hence, there is historical precedent for successful appeals.

John Textor has maintained confidence throughout the crisis, stating there is "no chance" Lyon will be relegated and defining the situation as manageable. In recent public statements, Textor has highlighted the significant capital outlays made by Eagle Football shareholders and underscored the selling of his Crystal Palace interest to generate more liquidity. The American owner has also remarked on the predicted stock market listing of Eagle Football, which could bring as much as €150 million, as financial stability.

Still, Lyon FC's appeal strategy meets significant hurdles. Chairman Jean-Marc Mickeler of the DNCG indicated that the watchdog continues to mistrust the promises made by the American, publicly slamming Textor's "clear and persistent lack of understanding" of the financial regulations of French football. Rather than speculative future plans, the regulatory agency has always stressed that they need “concrete and believable answers.”

From a neutral standpoint as a football analyst committed to anti-corruption ideals, the Lyon FC relegation case is a complicated study in modern football administration. Although the DNCG's rigorous financial monitoring helps to preserve competitive balance and avoid club collapses, the severity of demoting a historic club raises concerns about proportionality.

The case brings out the conflict between the realities of contemporary multi-club ownership models and conventional football administration. The appeals process will probably center on whether Lyon can show enough financial improvement and whether the DNCG fairly assessed the multi-club ownership arrangement. Success will be determined by Textor's capacity to offer actual financial assurances as opposed to future predictions, and on whether French football authorities can be persuaded that Lyon's financial condition has finally stabilized. Lyon has a difficult road to overturn this judgment, given the DNCG's track record of maintaining rigorous standards regardless of a club's historical past.