Lyon have been administratively relegated to Ligue 2 by French football’s financial watchdog, the DNCG, due to ongoing financial issues.

The decision, announced Tuesday, is subject to appeal but casts a shadow over the club’s immediate future.

Despite finishing sixth in Ligue 1 and securing a place in next season’s Europa League, Paulo Fonseca’s side now risk missing out entirely.

The DNCG had warned back in November that relegation was likely unless Lyon could provide sufficient financial guarantees to offset a €175 million debt.

Club president John Textor, who recently sold his stake in Crystal Palace and invested £70 million through his Eagle Football group, insisted Lyon’s financial position had improved.

The club also cut costs by offloading Rayan Cherki and Maxence Caqueret, and releasing high earners like Alexandre Lacazette and Anthony Lopes.

But for now, the punishment stands. If confirmed, Lyon will be replaced in Ligue 1 by Reims. Former president Jean-Michel Aulas called it a “terrible blow” and a “failure to understand,” reflecting widespread shock at the fall of one of France’s most successful clubs.

Lyon, seven-time Ligue 1 champions, are scheduled to begin pre-season on July 7.