Liverpool and the rest of the Premier League will be keeping a keen eye on developments in France following Tuesday's news.
Lyon, a top-tier French club, has been demoted to Ligue 2 due to financial concerns. The decision was taken after a meeting by the Direction Nationale du Controle de Gestion (DNCG), with Lyon retaining the right to challenge its Ligue 1 relegation. If this decision holds, it could send ripples across European soccer, potentially impacting Liverpool.
Liverpool has recently shown interest in Lyon's star player, Malick Fofana. Should Lyon's demotion be upheld post-appeal, the French team might be compelled to offload its top talent to generate funds, possibly including Fofana.
However, the Premier League is also dealing with its own uncertainties, particularly surrounding Manchester City. In 2023, City faced 115 charges for alleged financial breaches in the Premier League, with court proceedings commencing in October of that year.
City has consistently denied the charges and allegations made against it, and the soccer world has been awaiting a verdict since the hearing wrapped up in December.
As Dave Powell, the Liverpool ECHO's Chief Business of Football Writer, points out, the situations involving Lyon and Man City are distinctly different.
Manchester City faces 115 charges over alleged financial rule breaches, which the club denies
Manchester City faces 115 charges over alleged financial rule breaches, which the club denies (Image: Getty Images)
"There is the tendency to look at these things for clues when it comes to what happens with Manchester City, but in reality, these are two very different issues that will be dealt with in very different ways," Powell told the Liverpool ECHO.
"The Lyon demotion comes about due to concerns that the DNCG, the body that oversees the accounts and financial practice of professional French football clubs, has over the club's ability to service its heavy debt, which stands at more than £420 million ($572 million).
"Without Champions League football this coming season, and with a significant payroll commitment, the provisional demotion of the club comes about because the DNCG fear that the club would risk the structure of Ligue 1 next season in the financial situation that they find themselves in, suggesting that they believe there is genuine potential for the club to default, which could force the hand of the LFP, the governing body of French football's top tier, to act during a season.
"It may be a tactic to force Lyon to act and cut their cloth accordingly straightaway, with the exits of Rayan Cherki to Manchester City for an initial £30.5 million ($41.6 million) fee, and high earners such as Alexandre Lacazette released already seeing the club trimming the playing squad.
"DNCG's issue is about protecting the top tier of French football from a potential issue further down the line, and putting pressure on Lyon to act. Manchester City's is a legal case where evidence has been presented, arguments on both sides made, and where a decision will be independently handed down based on the representations.
"City's case is around historical breaches of financial regulation that were in place, while Lyon's is around operational mismanagement that has allowed them to rack up debt that the DNCG believe poses a threat to the club's future and Ligue 1's integrity.
"There isn't much that can be read into Lyon's situation and it doesn't offer up any clues. Whether or not City are exonerated, get a slap on the wrist, or are faced with something more serious will be determined by a legal framework.
"In terms of a timescale, it would be fair to assume that it's in the best interests of all parties to reach a conclusion before a new season kicks in, but that is by no means a given, and despite suggestions in some corners of the media that a decision is close, the reality is that we still could be some way off, and with the potential to appeal any decisions from both sides, it will run even longer.
"The fact that City have continued to spend has shown it to be a case of business as usual, and that is to be entirely expected. It does point to confidence on the City side that they will be cleared, but it would be folly to have stopped investing in the team until such time as they knew the outcome as they would have lost major ground competitively."