Behind Tycoon’s purchase of Southampton FC lies a bitter battle for power in Serbia

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BELGRADE – Serbia is obsessed with football. The capital’s giants, Partizan and Red Star, compete in one of the fiercest sports derbies in the world, and if you walk the city streets you’ll see graffiti of rival supporters scrawled across almost every wall. Betting shops with neon-lit signs are everywhere and they’re filled with chain-smoking men who sit obsessed with the TV screens showing this weekend’s games.

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

In England, Solak, 57, is just another faceless foreign billionaire with a particular name and a large portfolio. But behind Solak’s purchase of Southampton hides a bitter battle for Premier League rights in Serbia – a battle that is not just about money, but also the fight for independent media in a non-state. democratic.

In July 2021, Solak’s telecommunications and media giant United Group lost to state-backed Telekom Serbia in a bidding war for the right to broadcast the English Premier League (EPL) in the ex-Yugoslavia. Telekom has blown away United Group with an offer that averages 100 million euros ($ 113 million) per season over the period 2022-2028. It is would have a 700% increase from the € 12million United Group-owned TV channel SportKlub paid each year in the previous 2019-22 period.

It was a huge amount to pay for Telekom, more than broadcasters operating in much richer territories with much larger populations. In an interview with Danas, a daily belonging to United Group, Nemanja Simeunovic, an executive of SportKlub, declared that “Germany, Austria and Switzerland pay a total of 25 million euros per year [for the EPL]”while France” paid 40 million euros “.

The annual sum is almost three times the total 2020 profits of Telekom, which came out of to only 35 million euros, and the central bank of Serbia had to issue government bonds to finance the offer. The remainder of the deficit 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 Premier League rights?

Many suspect that Telekom’s motivations are primarily political. United Group, founded by Solak in 2007, owns the few media in Serbia that dare to criticize the government of President Aleksandar Vucic. Most notably, these are Danas and the TV news channels N1 and Nova-S, all of which are seen by activists as key protectors of Serbia’s shaky democracy.

Media literacy

Since entering government in 2012, Vucic’s right-wing Serbian Progressive Party has established almost all of the control on the national media landscape by selling old state-owned companies to submissive oligarchs or buying the loyalty of established media moguls by offering them financial incentives such as low-interest state loans and reliefs fiscal. In return, they make sure their TV stations and newspapers act as spokespersons for the government by silencing critical coverage, pushing back Vucic’s political line, and publicly mutilating his opponents.

This strategy is often referred to as “media capture,” which Anya Schiffrin of Columbia University in New York describe as “a situation in which governments or special interests networked with politics control the media”. She adds that “although traditional forms of pre-publication censorship no longer exist in many parts of the world, the media are still not truly free” when they were captured.

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

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

According to these operating principles, wresting the Premier League’s broadcasting rights from United Group could be an attempt by the government to put pressure on the company’s news service by chipping away at other parts of its revenue.

Telekom Serbia “is directly controlled by the [Serbian] government and Aleksandar Vucic ”, explains Prof. Marko Milosavljevic, head of the communication department at the University of Ljubljana in Slovenia. ” The reasoning [behind the broadcasting-rights bid] it is not only for Telekom to become more important in terms of the market, but also to diminish the power and prestige of, it seems, its main political opponent. And it seems they define United Group and Mr. Dragan Solak primarily as some sort of political opponent. “

Latest opposition media?

Solak’s policy is difficult to pin down. Vucic and his subordinates have made several attempts in recent years to link Solak with the former mayor of Belgrade and former leader of the opposition Democratic Party, Dragan Djilas. Serbian Prime Minister Ana Brnabic tweeted shortly after the news of the Southampton takeover: “This acquisition clearly shows what kind of oligarchy we were in… when Serbia was ruled by Solak’s political and trading partners. All of 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 the fact that Solak made 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, then in power. Solak founded cable TV and broadband internet provider SBB in 2000 after the fall of the autocratic regime of Slobodan Milosevic. 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 no more than a minor shareholder with a supervisory role on the board of directors. but no involvement in day-to-day operations. .

Dragan Solak

Dragan Solak

Faced with government pressure on its local assets in Serbia, the purchase of Southampton FC could be a way for Solak to fight back. Simon Chadwick, global sports professor at Emlyon Business School in Paris, said that by owning a football club, “[Solak] will have the right to attend high-level meetings within the Premier League … where key issues relating to the award of broadcast contracts are decided. Therefore, it will play a role in shaping the criteria for awarding broadcast contracts, ”which would benefit Southampton’s profit margin and could potentially give it leverage over the Telekom group.

And despite Vucic’s best attempts, the anonymous source close to United Group said that Telekom has done little to undermine the United Group’s information wing in Serbia, as the local market is only about 10% of its overall activity. United Group provides television, internet and telecommunications services to countries in South East Europe, including all 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 transaction unrelated to the Telekom dispute and that Sport Republic is a completely separate entity from United Group, which has no financial ties to Southampton.

Explaining the business logic behind this purchase, Nick Harris of Sports intelligence website, said in comments via email that, based on their end-of-season rankings, “Southampton will earn between £ 100million ($ 135million) and £ 160million each season from the broadcast of the Premier League “. If they become an established top-eight team, Solak “will have an asset that could be profitable on an annual basis, as well as an asset worth well over £ 200million,” he said. .

“Ethically accomplice”

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, led by the country’s crown prince Muhammad bin Salman. Bin Salman passed the league’s “fit and suitable people test” despite his involvement in the assassination of dissident journalist Jamal Khashoggi, who was allegedly dismembered at the Saudi Embassy in Istanbul in 2018. Critics say this shows that the test is not fit for purpose and that the English league itself is morally bankrupt.

Although a world away from Saudi rights violations and the horrific Khashoggi affair, there have also been accusations in Serbia of ethical lapses surrounding the sale of television rights to Telekom, with allegations that the EPL allowed himself to be used by Vucic in an attempt to silence political opposition and cement the government’s increasingly undemocratic regime.

“I think the Premier League is complicit – not legally, since there are no international sanctions against the Vucic regime or Telekom Serbia, but in ethical terms,” ​​said Prof Milosavljevic. “The Premier League is, through its sale of [broadcasting] rights, allowing such questionable 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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