Crystal Palace appear to have been handed a dramatic European reprieve after Lyon were relegated from the French first division.

The Eagles’ historic place in the Europa League had been under threat under UEFA’s rules on multi-club ownership thanks to the fact that Eagle Football Holdings – who have a 43 per cent stake in the club – are also the owners of Lyon.

John Textor, who owns the group, has agreed to sell the stake in Palace to New York Jets owner Woody Johnson in a desperate attempt to keep the south London side in the competition following their shock FA Cup Final win over Manchester City.

However, following an audit of Lyon’s books by Direction Nationale du Controle de Gestion (DNCG), the body responsible for overseeing the finances of French football clubs), the club have been demoted.

That decision is subject to appeal – but Mail Sport understands it delivers a huge shot in the arm to Palace’s hopes.

Crystal Palace have been handed a major boost in their bid to play in Europe next season

There had been complications over the multi-club ownership of John Textor, who has sold his shared in Palace

Lyon, though – who are also owned by Textor – have now been relegated to the second division

Texter’s Eagle Football Group had pulled a number of financial leavers in a bid to show their financial situation had improved, including selling Texter’s shares in both Palace and the Lyon women’s team, but officials not satisfied and have now taken action.

Now, though, Palace’s chances of being allowed to play in the Europa League – on the back of their FA Cup win – have been given a major boost. 

Under UEFA rules, Lyon would have taken the spot in the Europa League because they finished higher (sixth) in their domestic league than Palace (12th). Previously, those connected with Lyon had insisted that they would face no issues.

Confirming the news in a statement online, Lyon said: ‘Olympique Lyonnais takes note of the incomprehensible decision made by the DNCG tonight and confirms that it will immediately appeal.

‘Over the past few months, we have worked closely with the DNCG, satisfying all its requests with capital investments in excess of the amounts requested. Thanks to the equity contributions of our shareholders and the sale of Crystal Palace, our cash flow has improved significantly and we have more than enough resources for the 2025-26 season.

‘With demonstrated funds and a sporting success that earned us a place in European competition two years in a row, we sincerely do not understand how an administrative decision could relegate such a great French club. 

‘We will call to demonstrate our ability to provide the necessary resources in terms of cash flow to ensure the maintenance of the OL in L1.’ 

It is thought Palace representatives are due in Switzerland again on Friday with a decision due on Monday.

The Lyon development, however, is being seen as a ‘game changer’ by those with knowledge of the situation.

Though Lyon finished sixth last season, financial troubles have served as a major off-field issue at the club

The relegation means the likes of Alexandre Lacazette may be playing in the second tier in the 2025-26 campaign

The rules state that in multi-club groups the club which finished in a higher league position take precedent in such circumstances.  

Palace have been confident of finding a resolution given that no facilities, players or resources are shared with Lyon.

It is thought that Johnson will be subject to the same set-up as Textor’s firm, in that despite owning 43 per cent of the club, he will only have a quarter share of the voting rights, along with chairman Steve Parish, and US investors Josh Harris and David Blitzer. 

Blitzer’s ownership of Danish club Brondby was another potential sticking point should Palace have been ‘demoted’ from the Europa League to the Europa Conference.

Lyon, meanwhile, last year, reported debts of around €500 million (£418m). Textor, though, has insisted the financial state had improved before Lyon stood in front of the DNGC.

The relegation of the club, who faced off against Manchester United in the Europa League quarter-finals last season, will mean former Premier League stars could line up in the second tier next season.

Former United and Chelsea man Nemanja Matic is on the club’s books, as well as ex-Arsenal duo Ainsley Maitland-Niles and Alexandre Lacazette.

They are seven-time Ligue 1 champions, last winning the league in 2008 – their seventh domestic title in a row. Palace and UEFA declined to comment.