Facing P.S.G., Lille Clings to First Place as the Bottom Falls Out

On the surface, the pitch was a convincing one. Last year, the owners of Lille O.S.C. commissioned a graphic designer to produce a glossy prospectus, one intended to entice an investor into buying out their stake in the French soccer club.

There are dozens of these documents swirling around soccer’s financial netherworld at any given time, passed around by the army of bankers, lawyers, private equity investors, deal-makers and middlemen who serve as gatekeepers to the handful of individuals both wealthy and foolhardy enough to buy and sell teams.

Generally, pitches like the one about Lille are treated with both caution and cynicism, but this one probably would have been worth a second glance. The club’s infrastructure was sound: It had a large training facility at Luchin, and a capacious, modern stadium. Its location, too, was fertile ground for an ambitious, dynamic sort of a team: at the center of a transport nexus connecting London, Paris, Brussels and Amsterdam, in the center of a part of northern France that contains the headquarters of dozens of corporations and a population of two million people, almost a third of them younger than 20.

The centerpiece of the sales document, though, was Lille’s squad itself. The club’s real value, the prospectus claimed, lay in its talent. Every year, the club had invested substantial sums in crops of bright, young prospects, thanks in no small part to the work of Luis Campos, the Portuguese recruitment guru who oversaw the team’s transfer activity.

Each influx of players was referred to as an “acquisition vintage”; as with wine, the idea was that the prospects would get better with age. The club estimated that its squad, at the time, had a cumulative transfer value of around $420 million. Its ceiling, though, was much higher: If all the players developed as they should, the club claimed it was sitting on a pool of talent worth as much as $1 billion.

In ordinary circumstances, this weekend would be the moment that Lille’s approach was vindicated. On Saturday, Lille travels to Paris St.-Germain for the most significant game of the Ligue 1 season: The teams are tied atop the standings, with the P.S.G. side built for hundreds of million of dollars, the one that can call on Neymar and Kylian Mbappé and the rest, ahead of Lille only on goal difference.

But for Lille, the season when everything came together is also the season it all fell apart.

The Gathering Storm

Gérard López, Lille’s former owner, used to boast that if his team was not “the best in the world in trading players, we’re probably in the top three, four or five.” This season should have been his proof.

But if anything — and through no fault of their own — the market value of Lille’s players has not only fallen this season, but it has also dropped to such an extent that, in December, López had no choice but to cede control of the club.

The end game arrived just before Christmas. López was summoned to London to meet with Lille’s two main creditors, JP Morgan Chase and Elliott Management, the activist investment firm founded and run by the hedge fund billionaire Paul Singer.

In that meeting, the French sports newspaper L’Equipe reported, López tried everything he could to broker a deal to pay back the loans — worth around $140 million — that were set to come due this summer. He suggested a five-year financial restructuring, and proposed bringing on board an investor from the Middle East. He did not, it seems, want to give up Lille easily.

Whenever he could, he found time to call Christophe Galtier, Lille’s coach, to update him on the progress of the talks. “He kept me informed of the situation last night,” Galtier said in December. “We talked a lot, when it was possible to talk.” Galtier was clearly touched: He dedicated the team’s win against Dijon the next day to the man who had brought him on board in 2017.

Elliott and JP Morgan, though, were unmoved. López’s reign was over. The director Marc Ingla soon followed him out the door. Eventually, so would Campos. In their stead, almost immediately, came a company called Callisto Sporting SARL, a subsidiary of an investment firm called Merlyn Partners.

Both companies are registered in Luxembourg. Both are linked to Maarten Petermann, a former European head of special situations at JP Morgan. Olivier Létang, a veteran soccer executive, was named Lille’s president. The creditors’ decision, and the swiftness of their action, was rooted in the unavoidable fact that the financial reality of French soccer had shifted too much for López to be able to meet his commitments.

Like every club in Ligue 1 — with the exception of Qatar-funded P.S.G. — Lille was facing a cash-flow crisis. The league’s decision to cancel last season meant it had forfeited a tranche of broadcast revenue. Stadiums had been empty, at that stage, for almost nine months, and there was no sign that fans would be permitted to return any time soon. And, most pernicious of all, the league’s new television deal had collapsed; if a replacement could not be found, French domestic soccer was facing ruin.

Lille’s circumstances, though, were particularly perilous. López’s tenure had always been something of a roller coaster; the club had been sanctioned on several occasions by the D.N.C.G., the body that oversees the economic health of France’s soccer teams, and at one point was threatened with relegation because of its precarious finances.

Its release valve was always Campos’s seemingly never-ending pipeline of talent. In the summer of 2019, Lille had sold players — including the wing Nicolas Pépé, to Arsenal — for almost $180 million. A year later, even at the height of the pandemic, it had managed to turn a profit of $71 million in the transfer market.

Despite those impressive returns, the club was barely keeping its head above water. Quite how it burned through so much money is not entirely clear, although the considerable running cost of its stadium is generally regarded as a significant factor. In 2018-19, the club posted an operating loss of $77 million. The year before, that deficit was $120 million.

In a bull market, the club’s creditors had been prepared to tolerate those figures. That changed as 2020 became 2021, as revenues cratered, and as French soccer teetered on the brink. The club was heading for “bankruptcy in January,” according to Létang. This time, Lille could not sell its way out of trouble.

The Midas Touch

The squad that has brought Lille into contention for its first French title since 2011 — and, more impressively, its first since the Qatari investment in P.S.G. fundamentally altered Ligue 1’s competitive balance — is testament not only to the deft and astute management of Galtier, but also to the keen eye of Campos.

There is a reason that even José Mourinho, not a man given to complimenting other humans, is happy to talk about his friend’s “great career.” Campos, after all, is the technical director who pieced together the Monaco team that made the semifinals of the Champions League in 2017 and was then sold across the Continent for the better part of a billion euros.

His work at Lille was, quietly, no less impressive, even if he was never, technically, an employee of the club. Instead, he was employed by a company called Scoutly, which was wholly owned by Victory Soccer, the vehicle through which López and Ingla owned Lille.

López insisted that this Byzantine approach was necessary so that Campos could operate with “independence” in the market. Regardless, Lille benefited from the arrangement. Its squad is replete with the fruits of Campos’s labor: Boubakary Soumaré and Jonathan Ikoné, spotted in the reserve ranks at P.S.G.; Zeki Celik, plucked from the obscurity of the Turkish second division; Renato Sanches, offered a shot at rejuvenation after four years in the wilderness; and the two crown jewels, the most salable assets, the Dutch defender Sven Botman and the Canadian forward Jonathan David.

The belief that they might, together, one day be worth as much as that Monaco team of Mbappé and Bernardo Silva and Fabinho and the rest was, of course, overstated. That assumption rested on the idea that every single player would reach his maximum value, but it was, for a while, an explicable delusion.

That changed as soon as the pandemic struck, and it calcified as the scale of French soccer’s financial crisis was laid bare. Ligue 1 expects to sign a new television deal in the coming weeks, almost certainly with Canal Plus, the broadcaster it ditched last summer.

Broadcast money will bring some respite for the country’s clubs, but it will not fill the hole left by the empty promises of Mediapro. The teams of Ligue 1, then, are hurriedly trying to cut their budgets accordingly. Several already have agreed to pay cuts with their players. Lyon has offered a reduction in exchange for stock options.

Most, though, will still need to sell players, trading on Ligue 1’s self-styled reputation as the “league of talents.” The problem is not only that prices will be depressed by the fact that so many teams in France need to raise funds, but also that few clubs in Europe retain their purchasing power.

It was that, ultimately, that forced the hand of Lille’s creditors: Campos might still have provided players who can be sold, but in a market likely to be saturated by cut-price deals, Lille can no longer rely on premium fees.

What happens next — what happens this summer — is not yet clear. Létang has said little beyond an insistence that the club cannot rely on qualification for next season’s Champions League for its financial health. Stability, he said, will be his watchword. The players have, as yet, not been alerted to a looming fire sale.

A place in Europe would go some way, of course, to boosting the club’s finances. A French title, combined with a good showing in Europe next season, might help increase demand for some of the more recent acquisition vintages. Like wine, they will get better with age. The problem, now, is that what is inside the bottle matters rather less than the amount someone is prepared — or able — to pay for it.