Morningstar DBRS Removes FCT Olympique Lyonnais StadCo's Credit Ratings From Under Review With Negative Implications and Places Under Review With Developing Implications

DBRS Ratings GmbH (Morningstar DBRS) removed FCT Olympique Lyonnais StadCo's (StadCo) credit ratings from Under Review with Negative Implications and placed them Under Review with Developing Implications.

The credit rating actions follow Olympique Lyonnais' (the Club or OL) announcement that its appeal to the Direction Nationale du Contrôle de Gestion's (DNCG; financial regulator of professional football clubs in France) regarding the Club's relegation to Ligue 2 (second division in French football) was successful. The appeal's success enables the Club to remain in Ligue 1 (top division in French football) for the 2025/26 season. This development overturns the DNCG's earlier decision on 24 June 2025 to relegate the Club to Ligue 2 from Ligue 1 for the 2025/26 season. This outcome is positive from a credit rating perspective, as it provides more certainty and visibility for StadCo's secured revenues going into the next season as well as the Club's ability to cover operating expenses of the StadCo.

Morningstar DBRS removed the credit ratings from Under Review with Negative Implications and placed them Under Review with Developing Implications because of the appeal's success, which ensures the Club's continued participation in Ligue 1 and the Union of European Football Association's (UEFA) Europa League in the 2025/26 season, thereby preserving StadCo's secured revenues. Without short-term relegation risk, StadCo's ticketing and sponsorship revenues will retain their cadence in line with Morningstar DBRS' base case. The Club will retain its media revenues, although domestic media revenues could be much lower than in the past because of uncertainty around the success of Ligue 1's new channel after the collapse of the media rights deal with previous broadcaster DAZN. However, OL's ability to pay player salaries and StadCo's operating expenses will not be significantly diminished, especially considering planned cuts to player salaries.

During the under-review process, Morningstar DBRS will analyse the Club's various measures and commitments for compliance with DNCG's evaluation parameters as well as UEFA's Financial Fair Play (FFP) rules. Morningstar DBRS will also assess how far these measures have led to a substantially stronger balance sheet and liquidity position for the Club, which would thereby minimise the risk of relegation from regulatory action in the short to medium term and strengthen financial separation of the StadCo from the Club. Lastly, Morningstar DBRS will assess the impact of recent changes to the Club's senior leadership team and implications for governance and financial policies.

The objective of Morningstar DBRS' review is to determine whether the potential for adverse regulatory actions from the DNCG in the short to medium term is minimal and will not limit the Club's continued participation in Ligue 1; for this to be the case, the terms the Club is committed to as part of its successful appeal must be achievable. Our analysis will also focus on the Club's commitment to complying with the settlement agreement with UEFA (the Settlement; dated June 26, 2025), the breach of which could result in exclusion from European competitions and/or more punitive monetary payments. On an ongoing basis, Morningstar DBRS will also monitor whether the squad cost rationalisation measures materially affect Club's ability to attract and retain sporting talent.

The Settlement is a positive development because it will enable the Club to compete in UEFA competitions, thereby bolstering its revenues. The Settlement spans four seasons starting 2025/26. The Club entered into this agreement because of noncompliance with UEFA's FFP rules related to football earnings. In the short term, the Club is committed to complying with UEFA's requirement to improve its liquidity position through cash injections totalling EUR 60 million by 15 July 2025 and to convert these into equity by 15 October 2025. Morningstar DBRS expects the owners to provide equity infusions.

Morningstar DBRS will proceed with its review as more information becomes available and aims to resolve the Under Review status by 9 October 2025 at the latest.

Morningstar DBRS relied on the Club's announcement that its appeal with the DNCG was successful and has not examined the formal communication from the DNCG to that effect.

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.

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/458667.

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: Arthi Sambasivan, Managing Director, Asset, Project, & Sports Finance
Initial Rating Date: 20 October 2023
Last Rating Date: 26 June 2025

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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