French football club Olympique Lyonnais has warned that any
major delay or failure to raise additional funds could threaten its ability to
continue as a going concern, less than two years after it was bought by a US
businessman in a deal largely financed by investment group Ares. Eagle Football
Group (EFG), the Euronext-listed entity that houses Lyon, said late on
Wednesday that any “material delay” or “non-fulfilment” of a series of planned
cash injections could raise “issues” with its status as a going concern.
The company, part of a football empire built by US tech
entrepreneur John Textor, said its auditors were considering issuing a
qualified opinion on its accounts, after being unable to assess the
“reasonableness” of several assumptions. The EFG board said it had prepared its
financial statements on a going concern basis based on a set of expectations,
including that the company would receive up to €40mn from the planned sale of
Textor’s stake in Premier League club Crystal Palace.
That stake is part of Textor’s football investments, which
also include controlling positions in Lyon, Rio-based Botafogo and RWD
Molenbeek in Belgium, via his holding company Eagle Football Holdings (EFH).
Ares Management, the credit-focused investment group, provided the bulk of
financing for the Lyon acquisition in 2022.
Lyon is also expecting to receive up to €100mn early next
year as a result of the planned float of EFH in New York, as well as €75mn,
which may be sourced from the transfer of players owned by other Eagle football
clubs. EFG said that while it considered it “probable that some or all of these
financing transactions will be completed, any material delay or non-fulfilment”
of the transactions could raise “additional issues” for its status as a going
concern. It added that auditors Mazars’ work “did not enable them to gather
sufficient evidence to express an opinion on the reasonableness of the various
assumptions”.
Textor, who was previously executive chair of sports
streaming company fuboTV has reinvented himself in football, buying Lyon in a
record deal in December 2022 valued at close to €900mn. Since the Lyon
takeover, Textor has sold off assets, including US women’s team Seattle Reign
FC and the newly built LDLC Arena in Lyon. He also sold a majority stake in Olympique
Lyonnais Féminin, the women’s team, to US businesswoman Michele Kang.
Meanwhile, French football clubs have had to adjust to
falling television revenue, which has put a strain on many clubs’ finances.
Textor said in a statement that he was “extremely pleased” with the French
company’s operating results, noting that full-year revenues had increased 25
per cent to €361mn, including player sales, and that Lyon had qualified for the
Uefa Europa League, the second-highest tier of European competition in the
men’s game.
Textor pointed to a
“similar ‘going concern’ disclaimer” in its previous annual report. He said the
risk assessment was “appropriate, in a technical context” because the auditors’
forward-looking assessment did not take into account Lyon’s record of
generating substantial sums of money from selling players. He added that Lyon
benefited from the cash generated by EFH’s ownership of other football clubs.
“Given the dramatic increases in squad values and transfer activity expected in
both Lyon and Botafogo, we anticipate that player transfer revenues will, once
again, provide adequate liquidity for our business, as has been the case in
prior years,” he added.
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