Crystal Palace's hopes of playing in Europa League next season suffer major blow... as Lyon strike deal with UEFA just days after being relegated from French top flight

Crystal Palace's hopes of playing in next season's Europa League were delivered a blow on Friday when Lyon announced that they had reached an agreement with UEFA to play in the competition. 

The south London club qualified for Europe in the first time in their history when they won last season's FA Cup with a dramatic 1-0 victory over Man City in the final. 

However, their participation in the Europa League has been under threat due to UEFA's rules on multi-club ownership. Eagle Football Holdings — who have a 43 per cent stake in the club — are also the owners of Lyon.

UEFA prevent clubs who share owners competing in the same compeition and, under their rules, Lyon are set to take the Europa League spot because they finished higher (sixth) in their domestic league than Palace (12th). 

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.

A decision on whether that will be enough to allow both clubs to compete in the competition has been expected by the end of the month after Palace official flew to UEFA HQ in Switzerland for a crunch summit.

Palace hopes were raised this week when Lyon were relegated from Ligue 1 following an audit of their finances by Direction Nationale du Controle de Gestion (DNCG), the body responsible for overseeing the finances of French football clubs.

Lyon's demotion was seen by a 'game-changer' by insiders at Selhurst Park who believe that they should now be regarded as the higher-placed club should only one of the two clubs be allowed into the Europa League. 

Lyon, however, released a statement on Friday which suggests they are still in the box seat. 

'After validating its financial viability procedure, Olympique Lyonnais (OL) has signed an agreement with UEFA's club financial control body,' the statement read.

'The club could thus participate in the Europa League competition next season, subject to a favorable outcome during the appeal of the DNCG's decision.

'OL thanks the UEFA representatives who supported it in this procedure.'

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

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.