Seven-time French Champion Lyon Risks Relegation To Second Tier If Finances Are Not Rectified

Seven-time French champion Lyon risks relegation to the second tier at the end of the season and has been hit with a transfer ban because of financial irregularities.

The decision to provisionally relegate Lyon to Ligue 2 followed an audit of the club's finances by the French league's soccer watchdog, known as DNCG.

The DNCG decided that Lyon's financial situation must improve by the end of the season, and no signings can be made in the January transfer window. The DNCG will also oversee the players' salaries.

Lyon is owned by American businessman John Textor, who also has stakes in Premier League team Crystal Palace and Brazil’s Botafogo.

Textor had sounded confident after presenting the club’s case to the DNCG on Friday afternoon, reportedly saying that “the meeting went well” and “I am confident in our figures.”

Fifth-place Lyon reported earlier this month that it has a financial debt of 505 million euros ($532.6 million), and it means the former Champions League semifinalist may have to sell some of its best players, such as 21-year-old midfielder Rayan Cherki, in January.

High earners, such as club stalwarts Alexandre Lacazette and Corentin Tolisso, may also have to leave.

The DNCG ruled in July last year that Lyon did not provide sufficient financial guarantees, and Textor hit back at the DNCG's decision to monitor the club’s transfer activities last season .

Lyon's situation echoes what happened to Bordeaux, another storied club. The six-time French champion is now languishing in the fourth tier of French soccer.

Bordeaux, swamped by 118 million euros ($128 million) of debt, has closed its youth academy, women’s division and most administrative offices. It has filed for bankruptcy and renounced its status as a professional sports club.