After taking only one point from their opening four league matches in France’s Ligue 1 this season, Lyon’s players lined up for a dressing down. They had lost 4-1 against the French champions Paris Saint-Germain on September 3 and their fans had seen enough.
What followed was startling. The players stood together on the pitch and stared ahead at the Virage Nord, the stand hosting the Bad Gones ultras group, as a supporter took the microphone.
He said: “You are wearing the Olympique Lyonnais jersey and you listen to us. You are the ones who wear the OL jersey. Others before you have worn it and glorified it. You have no right to tarnish it.
“We want to sing your names with respect and love because we know you play with your heart. But we expect you guys to respect our jersey and to give your all on the pitch.”
For a footballer, there must be few things more awkward than having your own supporters query your commitment through a megaphone. But almost three months on, matters have barely improved at Lyon, a club that became part of European football’s aristocracy after winning seven consecutive top-flight titles in the 2000s.
Now, after 12 matches, the French club are bottom of the table. There is managerial chaos – they have just sacked their second coach of the season, Fabio Grosso, who was only appointed as Laurent Blanc’s replacement in September – friction in the boardroom, restrictions in the transfer market and discontent on the terraces. The sporting trauma is now obvious, but the story is also one of ownership turbulence.
In May, the club’s president, Jean-Michel Aulas, one of the most influential football executives of this century, stood down after almost 36 years. Aulas passed control over to U.S. businessman John Textor, whose Eagle Football Holdings group previously acquired a 77.49 per cent stake in the club.
Aulas, 74, took over an indebted second-tier club in 1987 but grew it exponentially. Lyon became famed for an academy production line that aided the men’s first team and boosted revenues, including graduates such as Alexandre Lacazette, Karim Benzema, Samuel Umtiti, Anthony Martial, Hatem Ben Arfa and Nabil Fekir.
According to a CIES Football Observatory report in early 2022, only Benfica, Real Madrid, Monaco and Ajax had brought in more money since 2015 than Lyon through the sales of players trained at their club.
At a cost of €600million (now £523m; $655m), the club built the 59,000-capacity Parc OL Stadium (which was renamed the Groupama Stadium after a sponsorship deal was struck in 2017) and embarked on the OL Valley Arena project, a 16,000-capacity arena to host music and sporting events.
In 2021, Lyon signed a 15-year commercial agreement with Live Nation to bring showcase events to the arena. Lyon also became one of the first clubs to seriously invest in women’s football, winning eight Champions League titles between 2011 and 2022.
On the surface, Lyon appear to be an example of how a club should be run rather than a cause for concern.
In 2020, the consultancy firm KPMG published a paper entitled The European Elite, which centred on the 32 most prominent European clubs and argued that over the past five years, the enterprise value of Lyon had risen, in percentage terms, more than any of its continental rivals.
Lyon’s enterprise value, a measure of a company’s total value, rose by 193 per cent from 2016, and the club was followed by Tottenham Hotspur, who added 158 per cent.
Considering Lyon had not won the French league for over a decade, it underpinned the resilience of a strong brand within the French market, even in a world in which PSG and Monaco have enjoyed substantial Qatari and Russian investment in recent times.
Textor’s arrival promised even more, with the American pledging to “spend” and “go after PSG”.
The acquisition valued the overall equity and debt of OL Groupe at around $800million (now £640m), with a further capital increase taking it to €884m. Under the agreement, Aulas, who retains around eight per cent of the club through his holding company, Holnest, would remain president for a three-year transition period.
So Lyon had a new stadium, a multi-purpose arena, a thriving academy, a successful women’s team, as well as fresh investment aligned with old-school expertise, much of which came with the promise of recurring revenue streams. Sunlit uplands lay ahead.
What happened?
- How did they get into this mess?
The roots of Lyon’s malaise can be found in the challenges that every major club felt in the Covid-19 pandemic, most notably around the absence of matchday and ticketing income, which were compounded when Ligue 1 broadcaster partner Mediapro stopped paying instalments on its €780million annual TV rights deal.
Additionally, when the pandemic paused the French league in the spring of 2020, Lyon languished in seventh place and when a points-per-game formula decided the standings, Lyon fell to the club’s lowest finish in more than two decades.
The French government’s decision to curtail the Ligue 1 season provoked criticism from Aulas, his side left without European football for the first time since 1996-97. This, combined with the club’s ongoing responsibilities to cover the costs of infrastructure, created a devilish challenge.
Lyon made net losses of €162.5million across 2020-21 and 2021-22. They have finished seventh and eighth in the past two seasons, missing out further on essential revenue from European competitions.
This means Lyon became much more dependent, on and off the pitch, on successful player trading.
Lyon started to slip. They still proved to be strong sellers on occasion, making over £175million more than they have spent since 2020, with major sales including Lucas Paqueta to West Ham, Bruno Guimaraes to Newcastle United and Malo Gusto to Chelsea for a combined £117million.
Lyon started to slip. They still proved to be strong sellers on occasion, making over £175million more than they have spent since 2020, with major sales including Lucas Paqueta to West Ham, Bruno Guimaraes to Newcastle United and Malo Gusto to Chelsea for a combined £117million.
The academy continues to drive revenue, with Castello Lukeba, 20, sold to RB Leipzig for €30million and Bradley Barcola, 21, joining PSG for €45m this summer.
But there have been some significant missteps, most notably failing to cash in on Houssem Aouar, Moussa Dembele and Memphis Depay, all of whom left on free transfers at the end of their contracts having previously been in demand in the transfer market.
The club’s previously smart recruitment has also fallen by the wayside, with underwhelming signings pockmarking the club’s record in the past couple of seasons.
The summer of 2019 saw Lyon spend more than €100million, including €25million plus bonuses on Jeff Reine-Adelaide from Angers, a former Arsenal youth-team player now playing for Belgian side RWD Molenbeek, a club also under the control of Lyon’s majority shareholder, Textor.
This is often cited as a strong example of where matters began to nosedive.
Lacazette, who returned to Lyon from Arsenal on a free transfer, scored 31 goals last season and represented an exception to the rule.
The club is seeking to enhance its recruitment strategy — hiring Matthieu Louis-Jean, formerly of Marseille, to lead matters — but critics still speak of a squad that is over-filled in some positions and under-filled in others.
Then there is the complexity of Lyon’s new ownership. Textor also owns a stake in Premier League club Crystal Palace (but does not have majority control); he has acquired control of Molenbeek, who were promoted to the Belgian top flight under his ownership last season; and is the majority shareholder of Brazilian club Botafogo, who appeared set for a stunning title success in the Serie A, only to spectacularly stumble in recent weeks. Textor, 58, has his own ideas about recruitment under a multi-club model where each market benefits the other.
In theory, Botafogo offers an avenue into South American talent and Molenbeek allows them to develop players and gain the points required for a Governing Body Endorsement (GBE) — a points-based system in which players from overseas need to earn at least 15 points to be eligible to play for a Premier League or EFL team. Lyon then helps expand the talent pool available and has a track record of trading players for high value.
And if you can win along the way, then everyone may be happy, but as it is, some supporters of Lyon wonder why their owner appears to be as interested in refereeing decisions in Brazil as he is in keeping their team in the French top flight.
At the outset of his negotiations with Lyon, Textor said the French club would be “the epicentre of our new organisation and our investments… the cornerstone of our project”.
He said he intended to “bring out the values of development and self-improvement”. The plan was to “regain the highest level, in France and in Europe”. Little surprise, therefore, that the Lyon fans are wondering how they have ended up bottom of the table and at real risk of relegation.
- How bad is it?
The alliance of new and old has fractured spectacularly between Aulas and Textor. In May, it was announced Aulas would be moving to a more ceremonial role as honorary chairman. Textor became CEO of the OL Groupe, which, in effect, meant Aulas’ days running the show were over.
This became a feud played out in the media, as Textor argued that Aulas had seller’s remorse and was struggling to let go of the club he had run for so many years.
The tensions rose at least partially because French football’s financial watchdog (the DNCG) insisted upon monitoring the club’s transfer activities and then restricting what Lyon could do in the transfer market last summer after it ruled Lyon “did not provide sufficient financial guarantees despite Textor’s financial arguments”.
Textor said during the summer transfer window: “It’s a terrible feeling to be going into this mercato with one hand tied behind our backs. We have the investment scale to position ourselves on players valued at €30m-€50m, but we can’t spend that money.”
After Textor delivered a warts-and-all press conference in August, Aulas appeared to accuse Textor of defamation.
Textor had suggested he had not been fully informed of Lyon’s financial predicament with the DNCG before the sale of the club.
Aulas denied this and then went to Lyon’s commercial tribunal to order the freezing of €14.5m of the club’s funds, which equates to the money owed to Aulas for the purchase of his shares.
Lyon then published a statement saying the club “deeply regrets that its former chairman, who is also a shareholder and director of the company and, as such, fully aware of the extremely damaging nature of his actions, has initiated a violent and illegitimate attack on Olympique Lyonnais”.
In the summer, Textor told The Athletic that the DNCG has been holding him to a different standard than they had for Aulas.
With financial restrictions in place, the incoming summer transfers were a mishmash of cheap deals, loans and free transfers, including Textor’s decision to sign Jake O’Brien, a £1million transfer from Crystal Palace (in which Textor has a stake), despite the player never having played for Palace.
Not everyone at Lyon has been impressed, but he did score the winning goal in Lyon’s only victory of the season so far, a 1-0 win at Rennes before the international break.
One particular transfer set tongues wagging when Molenbeek (another Eagle Football Holdings club) made use of the multi-club model to sign Ernest Nuamah from Nordsjaelland for €25million, an unusually high fee for a Belgian club, only for the player to immediately be loaned to Lyon.
With Aulas out of the way, Textor dismissed Blanc (an Aulas choice) four games into the season and probably regrets not doing it sooner.
Having considered Gennaro Gattuso and Julen Lopetegui, Textor then turned to Grosso to rescue Lyon’s fortunes, a coach who previously played for Lyon between 2007 and 2009 and impressed at Frosinone in Italy last season. That, too, has not worked out.
What’s the way out?
Textor required assistance to complete his initial acquisition of Lyon. American billionaire Bill Foley had originally been in line to provide the money, but he pulled out and decided to buy Premier League club Bournemouth instead.
Institutional investors became involved, with around €400million coming from the Ares Management fund, as well as €75million from Iconic Sports, and Elmwood Partners also contributed. They will want returns.
Lyon’s gross debt surpassed €450million in 2023, but Textor is taking steps to address this.
This month, Bloomberg reported that Lyon had reached a deal with investors to refinance €320million, while the club are also seeking to sell assets including the 16,000-seater arena, with reports indicating some of the cash will be reinvested into Eagle Football Holdings football academies around the world.
The club hope the money raised would also allow the group to repay the balance on long-term debt, which is necessary to fund the club’s stadium, such as state loans obtained following the Covid-19 pandemic, as well as ongoing responsibilities to lenders.
The overall group is also striking a deal — announced in May but subject to regulatory approval — that will form a women’s multi-team structure that would also encompass the U.S. women’s football team Washington Spirit. The overall company will be controlled by Spirit owner Michele Kang, while Lyon will take 48 per cent.
To avoid an interest in more than one NWSL club, the Lyon group (which also owns OL Reign) has begun a formal sale process for Reign.
While the picture is complicated and sticky, Textor appears to see it as manageable. The club deny that the sale of the arena or OL Reign represent cash grabs, arguing they are about returning to the “core focus” of football.
Lyon’s stadium will still provide a tasty revenue stream. Next June, they will twice host Taylor Swift, and Coldplay have three dates in the diary.
The Groupama also hosted five rugby union World Cup matches and it has 11 men’s and women’s football matches scheduled as part of the Paris 2024 Olympic Games.
But unless things change on the pitch, it will also be the home of a second-division French football club.