Palace out of Europa League amid Lyon conflict

Crystal Palace have been demoted from the Europa League to the Conference League after UEFA's Club Financial Control Body (CFCB) ruled the Premier League club was too closely linked to Lyon.

Palace are now expected to take the case to the Court of Arbitration for Sport, as has been the case with the other clubs excluded this summer.

Nottingham Forest, who were due to enter the Conference League in the playoff round next month, will be promoted to the Europa League subject to that CAS appeal.

The ruling means Palace are not guaranteed to play in the League Phase, as they must play a qualifier, while the financial rewards are far higher from playing in the Europa League.

Palace qualified for the Europa League by beating Manchester City in the FA Cup final, but seven days later Paris Saint-Germain's victory in the Coupe de France final meant Lyon were promoted to play from the Conference League to also play in the Europa League.

This immediately created a concern with UEFA's multi-club ownership rules, which forbid any party having a significant interest in more than one club in the same competition.

John Textor, the majority owner and chairman of Eagle Football Holdings, has a 77% stake in Lyon but also owns 43.9% of Palace. UEFA's regulations take issue with any dual holding above 30%, though Palace argued that Textor had no role in the running of the Premier League club.

Palace said last month that New York Jets co-owner Woody Johnson had signed a legally binding agreement to buy Eagle Football Holding's stake in Palace, subject to approval from the Premier League.

However, Palace had missed the March deadline to comply with the multi-club ownership rules.

"Honestly, I am stunned. We did everything possible to separate from the club, as UEFA would ask, with a sale process that began before the deadline, and a sale that will occur well before the draw," Textor told Reuters.

"Now we have sold out of a club that I love, to help Palace fans continue this dream year, only to have another off-the-pitch decision lay waste to an historic sporting victory."

MCO rules state that if two clubs are in violation of the regulation, the club that finishes higher in the league will play in the European competition. Even though Palace (12th) won the FA Cup and Lyon (sixth) only qualified on a technicality, the league placing alone determines the right to play.

This is contradictory to the competition rules for the Europa League, which prioritise domestic cup winners over those who qualify by league placing.

The situation was further clouded after Lyon were relegated to Ligue 2 due to financial issues, which would have seem them give up their place in the Europa League.

But Lyon won their appeal against that decision, effectively confirming their place in the Europa League and kicking the MCO issue back to UEFA.

Palace chairman Steve Parish was also shocked by the decision.

"We're devastated. It's a bad day for football. It's a terrible injustice," Parish told Sky Sports.

"I do believe nobody wants to see this. I don't think UEFA wants to see this. We've been locked out of a European competition on the most ridiculous technicality. Supporters of all clubs should be devastated for us.

"Everyone knows we're not part of a multi-club set-up. We're caught up in a rule that wasn't put there for us. This is a ludicrous decision. We will ask the appeal court to listen to our argument."

There was also an ownership conflict between Palace and Danish club Brøndby through David Blitzer, but the CFCB cleared this and Palace will place in the Conference League playoff round.

Twelve months ago, UEFA cleared Girona to play in the Champions League alongside fellow City Football Group team Man City. Manchester United were also permitted to take part in the Europa League, with Ineos, led by Jim Ratcliffe, also in control of Nice.

UEFA permitted the four clubs to be moved into a "blind trust," a method of making sure there are no shared management structures or decisions, and banned transfers between the clubs for 18 months.

However, UEFA had indicated this wasn't likely to be available as a long-term solution -- and in the regulations for this season the deadline to comply with financial rules was changed from June 1 to March 1.

Before this summer, no club had been removed from European competition due to MCO rules, but now Palace are the third to be effected by the stricter application of the regulations.

Irish club Drogheda United were scratched from the Conference League due to an ownership conflict with Danish club Silkeborg IF, and Hungary's Győri ETO will take part in the Conference League with FC DAC 1904 Dunajská Streda removed.

Drogheda won the FAI Cup in November, with the Irish league run on a calendar basis. It wasn't until June 1 that Silkeborg qualified for the Conference League -- two months after the new MCO deadline. Drogheda appealed to the CAS, but lost.

Palace and Drogheda would both likely argue that it's unfair to place such restrictions on clubs that usually have no chance of qualifying for Europe.

When the March 1 deadline approached, Palace hadn't played their fifth round game in the FA Cup. For Drogheda, who finished ninth, they did already know they had European football, but Silkeborg (seventh) were not expected to do so and claimed a European playoff in Denmark only after finishing top of the relegation group.

FC DAC 1904 Dunajská Streda have yet to have their case heard by the CAS.

Earlier this year, Club León were removed from the FIFA Club World Cup due to an ownership conflict with fellow Mexican club Pachuca, indicating a change in approach to MCO from football's regulatory bodies.

Information from Reuters was used in this report.