Press Release

Morningstar DBRS Downgrades FCT Olympique Lyonnais StadCo's Issuer Rating to BBB (low), Places All Credit Ratings Under Review With Negative Implications

Sports and Stadium Finance
June 26, 2025

DBRS Ratings GmbH (Morningstar DBRS) downgraded its Issuer Rating on FCT Olympique Lyonnais StadCo (FCT OL StadCo or StadCo) and the Senior Notes to BBB (low) and has subsequently placed all credit ratings Under Review with Negative Implications. The credit rating actions follow the Direction Nationale du Contrôle de Gestion's (DNCG; financial regulator of professional football clubs in France) announcement on 24 June 2025 that Olympique Lyonnais (OL or the Club) will be relegated to Ligue 2 (second division in French football) from Ligue 1 (top division in French football) for the 2025/26 season for financial reasons.

KEY CREDIT RATING CONSIDERATIONS
The relegation announcement follows the Club's provisional relegation in November 2024 based on liquidity-related challenges, which it tried to resolve through measures such as shareholder loans/equity injections and player sales. Morningstar DBRS understands that the Club will appeal the DNCG's relegation decision, and the outcome of the appeal will be announced in July.

Relegation to Ligue 2 would negatively affect the credit quality of FCT OL StadCo, as it would lead to a sharp decrease in secured revenues, including ticketing and sponsorship sales, for at least the 2025/26 season. In line with the debt documentation's provisions for a relegation event, the Club would need to fund a debt service reserve account to cover 12 months of debt service, providing an additional cushion to the transaction to service the debt.

While matchday attendance may remain stable, relegation could mean pricing pressures will affect general admission and VIP ticketing revenues as Ligue 2 matches are not as attractive for fans. Sponsorship revenues may also be affected if the existing contracts have a step-down on account of relegation, and sponsorship contracts that are due to be renewed may not receive lucrative offers. Lower revenues could also weaken the Club's ability to pay its operating expenses, including player salaries, while its sporting performance would likely be affected if the Club sells its best players to lower operating expenses.

As part of the Club's Under Review with Negative Implications status, Morningstar DBRS will focus on the outcome of the appeal process to the DNCG and the likelihood of the Club competing in Ligue 1 for the 2025/26 season. Morningstar DBRS will assess the impact of a relegation decision on the legal structure of the StadCo financing, including its operational and legal separation from the Club, and the potential for triggering an Event of Default under the terms of the debt documentation. Measures taken by the Club to raise incremental liquidity in supporting its appeal will also be considered. If the appeal process is unsuccessful and it becomes likely that the Club will play in Ligue 2 in the 2025/26 season, Morningstar DBRS could further downgrade the credit ratings by one or more notches.

Further to the appeal outcome, Morningstar DBRS will also focus its review on (1) the Club's governance practices, (2) the Club's liquidity policies and ability to perform in line with regulatory requirements, and (3) the interlinkages of the Club's financial performance with StadCo. Morningstar DBRS will proceed with its review as more information becomes available and aims to resolve the Under Review status by the end of September 2025.

CREDIT RATING DRIVERS
If the Club is unable to win the appeal process to the DNCG and cannot regain its place in Ligue 1 for the 2025/26 season, it is likely that Morningstar DBRS will take further negative credit rating action. Morningstar DBRS notes that a negative credit rating action could be more than a one-notch downgrade. Morningstar DBRS does not expect any positive credit rating action at this point.

EARNINGS OUTLOOK
Morningstar DBRS will provide an updated medium-term earnings outlook at the conclusion of the review.

FINANCIAL OUTLOOK
Morningstar DBRS will provide an updated medium-term financial forecast at the conclusion of the review process.

CREDIT Rating rationale
Morningstar DBRS based its credit ratings on OL's popularity and brand strength, the strong economic fundamentals in the City of Lyon (Lyon; rated AA (high) with a Stable trend by Morningstar DBRS), and StadCo's diversified revenue streams. The credit ratings also consider the importance of on-field performance and the competition for fans, ticket sales, and sponsorships with other football clubs. The credit ratings are constrained by the lack of support from Ligue 1 if the Club goes through a period of financial distress. Additionally, league governance is a concern since DNCG's decision to relegate OL will negatively impact its credit profile if the appeal is unsuccessful.

OL is one of the top football teams in Ligue 1, France's premier football league. The Club has been consistently successful, winning the league seven times and qualifying for the UEFA Champions League in 16 of the last 23 seasons. The Club has a large, passionate fanbase and the third-highest attendance among Ligue 1 clubs over the last 22 years.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)

(A) Weighting of BRA Factors 
In the analysis of FCT OL StadCo, the relative weighting of the BRA factors listed in the Sports Facilities and Stadium Financings section of the Global Methodology for Rating Sports Franchises, Leagues, and Stadium and Sports Media Rights Financings (the Methodology) was approximately equal.

(B) Weighting of FRA Factors 
In the analysis of FCT OL StadCo, the following FRA factor listed in the Sports Facilities and Stadium Financings section of the Methodology was considered more important: Debt Service Coverage Ratio.

(C) Weighting of the BRA and the FRA 
In the analysis of FCT OL StadCo, the BRA carries greater weight than the FRA.

Notes:
All figures are in euros unless otherwise noted.

Morningstar DBRS applied the following principal methodology:
-- Global Methodology for Rating Sports Franchises, Leagues, and Stadium and Sports Media Rights Financings (6 February 2025),
https://dbrs.morningstar.com/research/447472.

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (3 February 2025; https://dbrs.morningstar.com/research/447186), which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodology has also been applied:
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyses corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The primary sources of information used for these credit ratings include annual reports and financial statements, investor presentations, management projections and budgets, and management meetings. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings to be of satisfactory quality.

Morningstar DBRS does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

This credit rating is under review. Generally, the conditions that lead to the assignment of reviews are resolved within a 90-day period. Morningstar DBRS reviews and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://dbrs.morningstar.com/research/457005.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Gaurav Purohit, Vice President, European Corporate Ratings, Asset Finance
Rating Committee Chair: Anke Rindermann, Managing Director, Global Corporate Ratings
Initial Rating Date: 20 October 2023
Last Rating Date: 26 November 2024

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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Ratings

FCT Olympique Lyonnais StadCo
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