Louis negotiated his ransom himself, using money that he already had (or could reasonably access) in the east. His court back in Paris didn’t actively participate in the negotiations, since the logistics of long-distance communication in 1250 would have made that extremely impractical.

Louis’ crusade was initially successful. They captured the Egyptian port of Damietta in 1249, but then they thought it would be a great idea to continue inland. Spoiler: it was not a great idea. They were defeated at the Battle of Mansourah in February 1250. Much of the army died of disease, or they were executed if they were too poor to be ransomed. Louis himself was imprisoned, as were all the other wealthy prisoners.

The Ayyubids negotiated with Louis directly. Some of the other prisoners had also tried to negotiate their own ransoms, but supposedly Louis forbade them from doing so and promised he would take care of everyone’s ransom himself. At first it was agreed that the ransom would be 1 million bezants, which translated to 500,000 livres tournois - a significant amount, possibly an entire year’s revenue for Louis. The city of Damietta would also have to be returned - at the time, it was being governed by Louis’ wife Marguerite, who had just given birth to their son, Jean Tristan - essentially “John Sadness” due to the situation.

Once this settlement was reached, it was exactly at that moment that the army of the Ayyubid rulers of Egypt revolted and overthrew the sultan. The slave-soldiers, the Mamluks, established their own dynasty that ruled Egypt until the 16th century. It’s almost completely amazing to me how these two events took place at the same time, and Louis watched it happen out the window. The French prisoners figured that the ransom agreement was now void and they fully expected to be killed, but the Mamluks actually felt the Ayyubids had been too harsh. The new rulers renegotiated the ransom - Louis still had to return Damietta, but the money to be paid now amounted to 800,000 bezants, or about 400,000 livres tournois, half of which had to be paid immediately.

The 200,000 livres that were due immediately came from Louis’ funds that he had brought with him, or from what he had available over in the crusader states along the Mediterranean coast, or what he could borrow from the Knights Templar. We actually know the specific total that he paid - it was a bit more than half, 208,750 livres. Louis and the surviving prisoners were released, made their way to the crusader states and spent the next four years spending even more money on rebuilding as many of the crusader fortifications as they could. The truce with the Mamluks was only intended to last 10 years, so everyone knew there would be another war or crusade, eventually. It also turned out that the Mamluks never demanded the other half of the money, they were content with the 200,000 livres and Damietta.

Back in France they were aware of what was happening - Louis’ mother Blanche was governing France in his absence. News of Louis’ defeat and capture was pretty devastating, and there was even another popular crusade movement, a “Shepherds’ Crusade” in 1251. Blanche wouldn’t help them and they caused a lot of havoc wandering around France, attacking Jews and fighting with students in Orleans, before they dispersed. Blanche then died in 1252 while Louis was still in the east. They didn’t have to send any money, since Louis had enough with him (and then never had to pay the other half anyway), but they did have to deal with the fact that there was 200,000 livres missing from France’s income for that year, which may have had repercussions on the economy for the rest of the century.

It should also be noted that the Christian accounts of Louis’ captivity and ransom were mostly written many years later, and sometimes were written specifically for the campaign to make Louis a saint around 1300. So the accounts are sometimes pretty hagiographical (e.g., Louis refused to let anyone else pay, he refused to give up his Christian faith, there was even a story that the Mamluks wanted him to be the new sultan!). But the basic facts of the captivity and ransom are pretty straightforward.

Another example of a king paying a ransom, a generation before Louis, is Richard I of England. He managed to offend lots of people during his crusade from 1190-1192, so on the way home, he was taken prisoner by the Holy Roman Emperor, Henry VI. That was somewhat closer to home, so communication was a bit easier than it was between France and Egypt during Louis’ captivity, but the ransom was still negotiated in Germany between Henry and Richard personally. Richard’s ransom was set at 500,000 pounds, and unlike the Mamluks, Henry collected all of it. There wasn’t much Richard’s court in England (or in his territories in France) could do about that, but they were responsible for collecting taxes and sending the money to Henry, since Richard didn’t have that kind of cash just laying around. It was an extremely harsh burden for Richard’s lands in England and France.

Sources:

Margaret Wade Labarge, Saint Louis: Louis IX, Most Christian King of France (Little Brown and Company, 1968)

William Chester Jordan, Louis IX and the Challenge of the Crusade: A Study in Rulership (Princeton University Press, 1979)

M. Cecilia Gaposchkin, The Making of Saint Louis: Kingship, Sanctity, and Crusade in the Later Middle Ages (Cornell University Press, 2008)

M. Cecilia Gaposchkin, “The Captivity of Louis IX”, in Quaestiones Medii Aevi Novae 18 (2013), pp 85-114

John Gillingham, “Coeur de Lion in captivity”, in Quaestiones Medii Aevi Novae 18 (2013), pp 59-84

John Gillingham, Richard I (Yale University Press, 1999)

Yvonne Friedman, Encounter between Enemies Captivity and Ransom in the Latin Kingdom of Jerusalem (Brill, 2002)

Adam J. Kosto, Hostages in the Middle Ages (Oxford University Press, 2012)