The financial situation at Lyon's football club, now managed by Eagle Football Group (EFG), has raised concerns due to a significant debt of approximately 500 million euros and a projected deficit of over 25 million euros for the 2023/2024 fiscal year.
The auditors are considering issuing an uncertifiable opinion on the club's accounts, indicating potential financial instability. The club's future is uncertain, with potential player sales expected in the January 2025 transfer window, raising questions about the sustainability of its financial model. The timing and manner of the press release regarding these financial issues have also raised suspicions.
The absence of a positive EBITDA is alarming, as it suggests that the club is not generating enough revenue to cover its expenses. This financial strain is compounded by a decline in shareholders' equity and an increase in financial debt, leading to concerns about the club's balance sheet solvency.
The question of whether Lyon is on the verge of bankruptcy is complex. The club previously benefited from the financial support of former owner Jean-Michel Aulas, but the current ownership under EFG, an American group, introduces a different dynamic. The new owners are likely to prioritize financial returns, which may not align with the club's sporting ambitions.
This shift in ownership philosophy raises concerns about the club's ability to overcome its financial challenges without significant external support. An initial public offering (IPO) on the New York Stock Exchange could provide some relief, but relying on player sales to balance the books is a worrying strategy, as it indicates a lack of sustainable revenue generation. The absence of Champions League participation has further worsened the club's financial situation, emphasizing the need for Lyon to secure a place in the tournament to stabilize its finances.
To alleviate financial pressures, EFG plans to sell players in the upcoming transfer window. However, this strategy raises concerns about a potential fire sale and further financial instability. The club has already sold significant assets, diminishing its asset base and leaving it vulnerable.
The current trajectory resembles a leveraged buyout (LBO) scenario, where revenue generation is prioritized to service debt rather than investing in long-term growth. The implications of these financial maneuvers are significant, especially considering the recent relegation of Bordeaux to National 2. While Lyon's historical stature may provide some protection against immediate relegation risks, the financial realities cannot be ignored.
Lyon fans are understandably worried about the club's financial health. The combination of insufficient revenue and declining equity paints a troubling picture for the future. While an IPO could help alleviate some immediate financial challenges, relying on player transfers as the primary means of balancing the books raises concerns.
The club's management must navigate these challenges carefully to avoid further financial erosion. The focus will be on how EFG manages its assets and implements a sustainable financial strategy that prioritizes fiscal responsibility and competitive performance. The coming months will be critical for Lyon as they seek to stabilize their finances while maintaining their status as a prominent player in the football landscape. The intersection of sports and finance has never been more evident, and the outcome of Lyon's financial maneuvers will be closely watched by fans, analysts, and investors.