Lyon cuts losses by 74%, but debt continues to climb
Olympique Lyonnais's net loss decreased to €28m in 2023/24 from nearly €100m, according to the club's latest accounts.
Part 2 of a series on Olympique Lyon’s finances.
Olympique Lyonnais’s losses have reduced significantly, but the French club’s mounting debt triggered provisional sanctions, including the threat of relegation and a ban on signing new players.
The seven-time Ligue 1 champions’ overall loss reduced by 74%, according to Lyon's latest annual results. Net loss decreased to €28m in 2023/24 from nearly €100m.
The sharp decrease in net loss can be attributed to the improvement in profit generated from club operations, particularly due to the growth in revenue.
25% increase in revenue
Lyon’s total income grew by 25% from the previous year.
Revenue saw a €71.8m growth in 2023/24 driven by an increase in income generated from media and marketing rights, brand-related, events, and the sale of player registrations.
In a UK context, which would exclude revenue from player sales, Lyon’s revenue stands at €264.1m, a 33% increase from the previous year. Unlike French clubs, English teams only consider revenue derived from matchday, broadcasting, and commercial streams as their main sources of income.
Media and marketing rights income, which is one of Lyon’s most important sources of revenue, grew by €10m.
The club’s desire to compete in Europe was dashed with a seventh-place finish in Ligue 1. A European spot was an objective for the 2023/24 season, and qualification would have boosted its media and marketing revenue, according to its 2022/23 annual report.
While media and marketing rights income saw a €10m increase, tv rights growth in this stream essentially saw no change.
A second instalment of the LFP-CVC TV rights money amounting to €50m explains the reported profit.
In 2022, American investment fund CVC Capital Partners acquired a 13% stake in LFP’s commercial subsidiary in relation to TV rights for €1.5 billion. €1.1 billion was distributed to clubs, split over several financial years, of which Lyon was set to receive €90 million. Les Gones received €40m in its first installment in the 2022/23 season.
Excluding the €50m CVC payment, TV rights money was €45.3m, identical to the 2022/23 season.
The club credited the CVC money, along with revenue from OL Féminin’s brand license, for its improved EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation), a metric that measures how much money a company makes from its core business before deducting expenses such as borrowings or loans, taxes owed, and the loss of value of physical and non-physical assets.
Brand-related, events revenue take flight
Both streams of revenue hit record numbers, growing 165% and 161% respectively.
Brand-related income from merchandising increased by 7%. ‘Other brand-related revenue’ did the heavy lifting.
Brand-related income also includes royalties and fees. Catering played an important role in adding to revenue due to high levels of public spending on matchdays and at events across the 2022/23 season. A downturn in matchday revenue could potentially translate into slightly lesser money generated from catering. However, an increase in events could have more than compensated for any matchday shortfall.
More events, more money, more costs
Eagle Football Group’s Groupama Stadium and the LDLC Arena, recently sold to former Lyon president, Jean-Michel Aulas, hosted some major games and big names.
Revenue from major events increased by 320%. The group made €37m in 2023/24, an increase of €28m.
The group also generated revenue from the LDLC Arena before its sale on June 12 this year. The group benefited from the ‘first performances on behalf of the Paris 2024 Olympic Games.’
The group had to spend more to organise and host these events efficiently.
“External purchases and expenses rose by €12.6M (+11%), mainly reflecting growth in the Events business and the start-up of the LDLC Arena on November 23, 2023,” the Eagle Football said.
Income from seminars, visits, and guided tours totalled €6.4m, down from €7.8m the previous year.
Slump in ticketing, sponsoring - advertising money
Lyon’s ticketing revenue dropped by 10%. A majority of this money came from Ligue 1 home matches.
Sponsoring - Advertising income decreased by 6%.
“Revenue from Sponsoring - Advertising was adversely affected by the Ligue 1 ranking (6th), as well as by the reduction or termination of contracts with certain partners experiencing financial difficulties,” the club said.
Big rise in operating profit
Income from Lyon’s core business activities helped the club make a big turnaround.
Operating income improved by €102.9m, standing at €26.5m at June 30, 2024. This included ‘other ordinary income and expenses’ amounting to €38.5m.
The group made profits from selling some of its assets, such as a majority stake in the women’s team ‘OL Féminin’ in February, OL Vallée Arena (LDLC Arena) was sold to Aulas for €70m, of which €54m was paid in cash, and a further €16m will be paid with shares. In addition, American women's team Reign FC (97% shares) was sold to the MLS club Seattle Sounders FC in partnership with private equity firm Carlyle Group for $58m in June. The group reported a profit of €45.2m from these sales.
Lyon spent €5.2 million on player-related activities, mostly notably on loan players.
€56.2 million was recorded in costs relating to the reduction in value of physical assets (stadium, equipment, etc.), spreading out the transfer fee of players that have been signed over the length of their contracts (amortisation), and money set aside for future potential costs or risks, such as injuries or legal disputes. These costs were down €5.8 million, mainly due to player trading or players that were sold before their contracts were up.
Why did the debt grow?
Lyon’s total financial debt rose to €505.1m from €458.5m last year.
The club refinanced a majority of its older debts in December 2023. This was likely done on different terms, increasing the total amount owed. Some older debts were cleared as part of the refinancing process. The debt linked to the property lease of the OL Vallée Arena was transferred when it was sold to Aulas. While Lyon no longer owes this money, it has had an impact on the structuring of its debts.
After all these changes, total debt still increased by €46.6m.
€161.7m owed within the next year
Lyon owes €161.7m in short-term debts, up €61m from last year. This increase is driven by €20m linked to events. Eagle Football Group owes €5.5m in taxes on the sale of OL Reign and another €35m in short-term obligations.
What next for Lyon?
French football financial watchdogs, the DNCG, have given Lyon until the end of this season to work out its financial struggles, failing which Lyon may find itself in Ligue 2. Les Gones are optimistic about the club’s on-field performances and the ‘new strategy’ in place.
“Under the pulse of new coach Pierre Sage, and the arrival of new players during the winter mercato, a new sporting dynamic has led to a clear improvement in sporting results,” said Eagle Football Group. “Thanks to its 6th place in Ligue 1 at the end of the 2023/2024 season, the club benefits from direct qualification for the 2024/2025 Europa League.”
While the club was reliant on a European spot in the 2022/23 season to boost its financial position, the pendulum has swung towards maximising business operations. Failure to do so would make on-field performances irrelevant, with smaller teams in the lower divisions relishing the potential opportunity to clash with what was once a titan in French football.
Lyon is, however, battling out on all fronts. The club has sold assets to ‘refocus on men’s football.’
“In line with its strategy of refocusing on men’s football, on June 12, 2024, Eagle Football Group sold all its shares in OL Vallée Arena (the company operating the LDLC Arena) to HOLARENA, a company newly created by Holnest (a family office owned by Jean-Michel Aulas) and a group of investors.” The sale of Reign FC (formerly OL Reign) was also a part of this strategy.
Thanks to Groupama Stadium, Eagle Football Group will have money flowing through events revenue. The stadium hosted 11 men's and women's football matches during the Paris 2024 Olympic Games between July and August. France played Belgium in the UEFA Nations League in September. It also hosted the opening and closing ceremonies of the WorldSkills Lyon 2024 (competition for young people to showcase their expertise in various skills) and will serve as a venue for the TOP 14 rugby semi-finals in June next year. Imagine Dragons will perform at the stadium on July 3, 2025.
Up next: How does Eagle Football Group plan on saving Lyon?
More on French football finances:
Lyon's financial struggles: Media revenue and Champions League hopes at risk
Part 1 of a series on Olympique Lyon’s finances.
