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Behind Tycoon's Purchase Of Southampton FC Is A Bitter Battle For Power In Serbia


Fans watch Southampton take on Leeds United during an English Premier League soccer match at St. Mary's Stadium in Southampton in October.

BELGRADE -- Serbia is soccer-obsessed. The capital's giants, Partizan and Red Star, contest one of the world's fiercest sporting derbies, and if you walk through the city streets, you'll see rival supporters' graffiti scrawled across almost every wall. Betting shops with neon-lit signs are everywhere and they're filled with chain-smoking men who sit fixated on TV screens showing the matches for that weekend.

Serbian soccer made international headlines last week when it was announced that Sport Republic, an investment firm backed by Serbian media magnate Dragan Solak, had acquired an 80 percent stake worth $135 million in English Premier League team Southampton FC.

In England, the 57-year-old Solak is just another faceless foreign billionaire with a peculiar name and a large portfolio. But behind Solak's purchase of Southampton lies a bitter battle for the Premier League rights in Serbia -- a battle that is not just about money but about the fight for independent media in a democratically challenged state.

In July 2021, Solak's telecoms and media giant, United Group, lost out to state-backed Telekom Serbia in a bidding war for the right to broadcast the English Premier League (EPL) in the ex-Yugoslavia region. Telekom blew United Group away with a bid that averages out to 100 million euros ($113 million) per season over the 2022-28 period. This is reportedly a 700 percent increase on the 12 million euros that United Group-owned TV channel SportKlub paid annually during the preceding 2019-22 period.

It was a huge amount for Telekom to pay, more than broadcasters operating in far more affluent territories with much larger populations. In an interview with Danas, a United Group-owned daily newspaper, SportKlub executive Nemanja Simeunovic said that "Germany, Austria, and Switzerland cumulatively paid 25 million euros per year [for the EPL]" while France "paid 40 million euros."

The annual sum is almost triple Telekom's entire 2020 profits, which came out to just 35 million euros, and Serbia's central bank had to issue government bonds to fund the bid. The rest of the shortfall is expected to be covered by loans, which will increase public debt, and funds from the state budget.

Telekom's grandiose offer raises an important question: Why would the Serbian state pay such a high sum for the rights to the Premier League?

Many suspect that Telekom's motivations are primarily political. United Group, which was founded by Solak in 2007, owns the few media outlets in Serbia that dare to criticize President Aleksandar Vucic's government. Most prominently, these include Danas and the TV news stations N1 and Nova-S, all of which are seen by activists as vital protectors of Serbia's rickety democracy.

Media Mastery

Since first entering government in 2012, Vucic's right-wing Serbian Progressive Party has established near-total control over the domestic media landscape by either selling formerly state-owned companies to pliant oligarchs or buying the loyalty of established media tycoons by offering them financial incentives such as low-interest state loans and tax breaks. In exchange, they ensure that their TV stations and newspapers act as amenable mouthpieces for the government by silencing critical coverage, pushing Vucic's political line, and publicly mauling his opponents.

This strategy is often referred to as "media capture," which Anya Schiffrin of New York's Columbia University has described as "a situation in which governments or vested interests networked with politics control the media." She adds that "while traditional forms of prepublication censorship no longer exist in many parts of the world, the media are still not truly free" when they have been captured.

Russian President Vladimir Putin (right) meets with Serbian counterpart Aleksandar Vucic in Sochi, Russia, in November.
Russian President Vladimir Putin (right) meets with Serbian counterpart Aleksandar Vucic in Sochi, Russia, in November.

By those operating principles, wrenching away Premier League broadcasting rights from the United Group could be an attempt by the government to put pressure on the company's news arm by eating into other parts of its revenue.

Telekom Serbia "is directly controlled by the [Serbian] government and Aleksandar Vucic," says professor Marko Milosavljevic, head of the communications department at the University of Ljubljana in Slovenia. "The reasoning [behind the broadcasting-rights bid] isn't just for Telekom to become more important in market terms, but also to decrease the power and prestige of, so it seems, its main political opponent. And it seems that they define United Group and Mr. Dragan Solak primarily as some sort of political opponent."

Last Opposition Media?

Solak's politics are hard to pin down. Vucic and his subordinates have made repeated attempts in recent years to link Solak with the former Belgrade mayor and one-time leader of the opposition Democratic Party, Dragan Djilas. Serbian Prime Minister Ana Brnabic tweeted shortly after news of the Southampton takeover broke: "This acquisition shows crystal-clear what kind of oligarchy we were in...when Serbia was led by Solak's political and business partners. All this [the takeover] was achieved using the money of Serbian citizens, the misuse of state resources (Telekom), and political power."

Brnabic's claim stems from Solak making his fortune in the 2000s, before Vucic came to power, and when he could have potentially benefited from close ties to the centrist Democratic Party, which was in office at the time. Solak founded cable TV and broadband Internet provider SBB in 2000 following the fall of Slobodan Milosevic's autocratic regime. In 2007, SBB merged with three other regional companies to form United Group, which then expanded into the media space. According to a source close to United Group who wished to remain anonymous, Solak has since sold most of his stake in the company and is now just a minor shareholder with a supervisory role on the company board but no involvement in day-to-day operations.

Dragan Solak
Dragan Solak

Facing a government squeeze on his local assets in Serbia, purchasing Southampton FC could be one way for Solak to fight back. Simon Chadwick, global professor of sport at Emlyon Business School in Paris, said that by owning a soccer club, "[Solak] will be entitled to attend high-level meetings inside the Premier League...where key issues pertaining to the award of broadcasting contracts are decided. Hence, he will play a role in shaping the criteria for awarding broadcast contracts," which would benefit Southampton's profit margin and could potentially give him leverage over the Telekom group.

And despite Vucic's best attempts, the anonymous source close to United Group said that Telekom had done little to dent United Group's news wing in Serbia, as the local market only amounts to around 10 percent of its overall business. United Group provides television, Internet, and telecoms services to countries across Southeastern Europe, including all the countries of the former Yugoslavia, Bulgaria, and Greece. The company's business in Greece, for example, is worth three times as much as in Serbia.

The anonymous source said that Solak's entry into the Premier League is a purely commercial move unrelated to the Telekom dispute and that Sport Republic is a completely separate entity from the United Group, which has no financial ties to Southampton.

Explaining the business logic behind this purchase, Nick Harris, from the Sporting Intelligence website, said in e-mailed comments that, depending on their end-of-season rank, "Southampton will earn between 100 million pounds ($135 million) and 160 million pounds each season from Premier League broadcasting." If they become an established top-eight team, Solak "will have an asset that could be profitable on an annual basis, and also an asset worth well over 200 million pounds," he said.

'Ethically Complicit'

The purchase of Southampton is just the latest move by a foreign tycoon to buy an English Premier League club. In 2021, the league controversially approved the sale of Newcastle United to Saudi Arabia's sovereign wealth fund, which is run by the country's crown prince, Muhammad bin Salman. Bin Salman passed the league's "fit and proper persons test" despite being implicated in the assassination of dissident journalist Jamal Khashoggi, who is thought to have been dismembered in the Saudi Embassy in Istanbul in 2018. Critics claim that this shows that the test isn't fit for purpose and that the English league itself is morally bankrupt.

While a world away from Saudi rights abuses and the gruesome Khashoggi case, there have also been accusations in Serbia concerning the ethical failings about the sale of TV rights to Telekom, with claims that the EPL has allowed itself to be used by Vucic in an attempt to silence political opposition and cement the government's increasingly undemocratic rule.

"I believe the Premier League is complicit -- not legally, since there are no international sanctions against Vucic's regime or Telekom Serbia, but in ethical terms," said professor Milosavljevic. "The Premier League is, through its sale of [broadcasting] rights, enabling such dubious business practices and increasing media capture in the region, transforming British football into a direct political tool of power and control."

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    Aleks Eror

    Aleks Eror is a freelance journalist based between London and Belgrade. His work has been published by The Guardian, Foreign Policy, The New Statesman, and other publications.

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