Why Crystal Palace being kicked out of the Europa League is tragic - but it's a necessity

On the face of it, UEFA’s decision to demote Crystal Palace from the Europa League to the Europa Conference League looks like an injustice – a verdict born of bureaucracy and rigid adherence to rules which simply weren’t written to take the club’s specific situation into account. But are Palace a necessary sacrificial lamb in a larger and more important battle against multi-club ownership?

Palace fans, of course, can’t be expected to see it that way. They support an historic club which has, perhaps remarkably, never played in continental competition – and while they will at least make their debut on the European stage next season, it won’t be in the Europa League, a position in which they had earned by defeating Manchester City to win the 2025 FA Cup, their first major trophy.

The club is expected to appeal UEFA’s ruling, although at the time of writing that had not yet been officially confirmed. They may well succeed in that appeal, even if the letter of the laws laid down by European football’s governing body suggests that they face an uphill struggle. If they fail, however, that may end up being better for football as a whole – even if it the way at which it comes at Crystal Palace’s expense is deeply cruel.

What UEFA hopes to achieve by demoting Crystal Palace from the Europa League

Palace were relegated from the Europa League due to breaching rules regarding multi-club ownership – specifically, the large minority stake which was, until recently, owned by American investor John Textor meant that they were not allowed to play in the same UEFA competition as Lyon, who are majority-owned by Textor’s Eagle Holdings Group.

Although Textor sold his shares in Palace to fellow American billionaire Woody Johnson (whose part-ownership of the club may raise some concerns in its own right) at the end of the season, and also later resigned from his position on Lyon’s board, he did not do either by 1 March, the deadline set by UEFA for clubs to resolve potential conflicts of interest.

In that regard, Palace may find it difficult to make their case to the Court of Arbitration for Sport should chairman Steve Parish decide to go down that route, which he has suggested that he will. By the letter of the law, Textor was obligated to divest his shares in Palace by the end of February and failed to do so.

Still, although Palace technically breached UEFA’s regulations, there is every reason for Parish to have described the eventual decision as “a terrible injustice” and “a ludicrous decision.” The rules were not targeted at the kind of ownership structure that Palace had.

Textor may have owned over 40% of Palace’s shares, but had just 25% of the voting rights and Parish believes that the club demonstrated that he did not have any significant control or influence over the club’s direction. Furthermore, Textor had been actively trying – albeit failing – to sell his shares for some time, having found himself unable to purchase a controlling stake.

UEFA’s rules were put in place to try and stymie the growing influence of multi-club ownership models, in which several teams are owned by the same holding company or individual and share resources or trade players between them, usually primarily for the benefit of the team at the top of the tree.

Crystal Palace are not a good example of a team who benefit from such a model, and are right in claiming that “we're caught up in a rule that wasn't put there for us”, as Parish suggested. But in punishing them anyway, UEFA appear to be taking a belt-and-braces approach to governance which history suggests will be a necessity if they are to prevent multi-club ownership from taking over European football.

That’s a process that is well underway already. Over 300 teams worldwide are now believed to be in a multi-club set-up, and the number is increasingly rapidly. The economic and footballing benefits to teams at the top of these trees are potentially significant, but they also provide opportunities to exploit financial regulations and risk the fiscal health of the lesser sides involved - concerns which have already been highlighted by the actions of such groups over recent years. A clampdown seems like a necessity - and if UEFA are going to stand at the forefront of that fight, then Palace’s situation may be an unfortunate requisite.

Why Palace may be necessary victims in the fight against multi-club ownership

Manchester City, Chelsea and Manchester United are all part of multi-club ownership groups, and there is growing concern not only over the advantages that such systems provide certain teams, but also the financial danger in which teams inside such groups can find themselves in.

Textor’s Eagle Holdings Group provides a textbook case of the way such models can exploit common ownership. As well as Lyon, Textor owns Brazilian side Botafogo, American outfit FC Florida and Belgian team KVB Moelenbeek, and the way in which resources have been moved between the teams has raised concerns.

For instance, in 2023, with Lyon in deep financial difficulty (the club were provisionally relegated to Ligue 2 last month due to unpaid debts before the decision was eventually reversed) and under spending restrictions, their group used Moelenbeek to ‘buy’ winger Ernest Nuamah for a transfer fee reported to be greater than the Belgian club’s annual turnover.

Nuamah was then immediately loaned to Lyon with a purchase option for the same amount, never once wearing the shirt of the side that supposedly owned him, before completing a formal transfer the following year. In that way, Lyon were able to circumnavigate the spending restrictions imposed on them due to the perilous state of the club’s finances.

A potentially more dangerous example was provided by 777 Group, who came close to adding Everton to a large stable of teams in 2024. The group, which has now dissolved, has been accused of large-scale fraud (accusations which 777 deny) and was forced to divest many of its holdings in teams to creditors A-Cap as a result, essentially handing control of several sides to a company whose only interest in the teams was to sell them to recoup their money.

The teams involved – including Genoa and Standard Liège – are slowly being sold by A-Cap to new owners, but others, including Brazilian outfit Vasco da Gama, still face an uncertain future. As it stands, the damage from the fallout of 777’s collapse appears to have been limited, but the risk that several historic teams could have been caught up in a risky and allegedly illicit operation or could have been treated as distressed assets by new owners appeared to be significant.

Palace, of course, were never really in any such danger given that Parish and his boardroom allies had effective control over the club’s direction. They also never shared resources with any of Eagle Group Holdings’ other teams, and were not benefiting from the model in the way that sides like Chelsea are through their joint ownership with RC Strasbourg.

But the fact remains that multi-club ownership is dangerous, both to the competitive integrity of European football and, potentially, to the financial health of individual sides involved. They allow the richest teams to buy an even larger edge and put teams further down the pyramids in a position in which they will always be subservient to the needs of a ‘bigger’ team, quashing their own ambitions and often limiting their future prospects. There is a reason that many Strasbourg fans have protested BlueCo’s ownership vigorously despite the competitive benefits they have enjoyed from being able to loan Chelsea fringe players.

Palace’s suffering may be unreasonable, but we live in an age in which teams will search for any loophole, any short-cut towards circumventing the rules which exist. Just look at the ‘creative’ ways in which teams have dodged issues with the Premier League’s profit and sustainability rules.

Whether it’s Leicester City’s lawyers successfully arguing that they couldn’t be punished for a 2023/24 PSR breach because they weren’t technically under the jurisdiction of the same league for the entire accounting year, or teams such as Newcastle United and Nottingham Forest trading players at potentially inflated values to boost their profits, or Chelsea and Aston Villa selling their women’s teams to their own holding companies to raise funds, teams will seemingly do anything rather than actually change the way they operate to comply with the regulations.

Had Palace been let off the hook on the grounds that their specific situation didn’t morally or ethically violate the spirit of the laws, then other teams would surely have exploited that by tweaking their ownership structures in the future in order to mirror Palace and Lyon’s situation, without actually making fundamental alterations to the way they are run.

Crystal Palace are, effectively, the victims of the reality that had they been given a pass, it could have undermined UEFA’s attempt to prevent multi-club ownership from becoming the default operating model within the game. UEFA were faced with a choice – either ensure that their regulations remain as watertight and excuse-free as humanly possible, or do the ‘right’ thing in the short term knowing that it could open the door to abuses of the rules by less scrupulous teams down the line.

There is an argument that UEFA are fighting a losing battle anyway, especially with FIFA seemingly unwilling to do anything on a global level, and certainly this is an attempt to shut the stable door after an entire Cheltenham Festival’s worth of horses have bolted for the hills – but the threat that multi-club ownership presents means that the effort surely has to be made, even if it is doomed to failure. There will be further legal tests to come, more appeals, more teams of lawyers looking for a way through. The barrier UEFA has put up may prove to be too fragile anyway, but allowing it to become further weakened on its first real test run would have been a poor decision.

It’s also concerning that while UEFA’s current official stance is that multi-club models should be restricted by their regulations for the sake of competitive integrity, president Aleksander Čeferin has already discussed his desire to “discuss” and “rethink” the rules - although since he said that in 2023, no changes have yet been made, suggesting that the broad consensus within the organisation is that preventative measures are still required.

Palace are, of course, essentially an innocent victim. They aren’t the kind of team that UEFA wants to clamp down on, and aren’t the reason that these rules have become a sad necessity. But the fabric of football requires that something be done, and the harsh treatment of Palace at least suggests that UEFA are taking their responsibility seriously. It’s just deeply unfortunate that the club who take the first hit don’t particularly deserve it, and are taking it because of the decisions of one man who didn’t even have any great degree of influence at Selhurst Park.

The idea that this may be an unwilling but nevertheless noble sacrifice probably won’t placate Parish or Palace’s understandably upset fans. The rules, perhaps, could be better-written, but it is better for them to be too strict that too generous. At least Palace will be heading into a competition that they stand every chance of winning. Should they find themselves lifting another trophy in Leipzig in ten months’ time, perhaps they won’t feel so hard done-by – and if West Ham can do it…