PARIS — The iconic French football club Lyon, a seven-time champion, is facing the threat of relegation to Ligue 2 by the end of the current season. Compounding their troubles, the club has been slapped with a transfer ban due to identified financial misconduct.

A recent audit performed by the DNCG, the regulatory authority for French football finances, led to the decision to provisionally demote Lyon. The DNCG has mandated that the club must enhance its financial standing by the season’s conclusion, also imposing a restriction on any new signings during the upcoming January transfer window. They will be closely monitoring player salaries to ensure compliance.

The club is currently under the ownership of John Textor, an American entrepreneur who is also involved with Premier League team Crystal Palace and the Brazilian side Botafogo. Following a presentation to the DNCG regarding the club’s financial status, Textor expressed optimism, reportedly stating that he had a favorable impression of the discussions and expressed confidence in the financial figures presented.

Earlier this month, Lyon revealed a staggering financial debt amounting to 505 million euros (approximately $532.6 million). This precarious situation may force the club to part ways with standout players, including 21-year-old midfielder Rayan Cherki, in the January transfer market. Additionally, several high-salaried players, such as veteran talents Alexandre Lacazette and Corentin Tolisso, could also be seeking new opportunities elsewhere.

The DNCG previously ruled that Lyon lacked adequate financial guarantees in July of last year. In response, Textor contended that the DNCG’s decision to oversee the club’s transfer activities was unwarranted.

Lyon’s current predicament draws parallels to that of Bordeaux, another historically successful club that currently finds itself struggling in the fourth tier of French football. Bordeaux, burdened with debts totaling 118 million euros ($128 million), has had to shutter its youth academy and women’s team and has significantly scaled back its administrative operations. The club has also filed for bankruptcy and relinquished its professional sports club status.