Msunduzi Municipality To Pursue Legal Action Against MaMkhize

Msunduzi Municipality Mayor Mzimkhulu Thebolla has confirmed that their agreement with Royal AM will terminate if the club loses its Premier Soccer League (PSL) membership next week.

Furthermore, the municipality intends to pursue legal action against the club for breach of contract.

The PSL announced this week that a Board of Governors’ Meeting (BOG) will be held on Thursday to finalize the decision to terminate Royal AM’s membership due to the club’s failure to meet its league obligations.

The PSL stated: “Royal AM misrepresented material information in its renewal application submitted on 1 July 2024. Royal AM transferred shares in violation of Article 14.6 of the National Soccer League (NSL) Constitution. The Executive Committee has resolved to recommend the cancellation of Royal AM’s membership to the Board of Governors of the League, in accordance with Articles 10.16, 10.14, and/or 14.6 of the NSL Constitution. Royal AM and all Member Clubs of the League will be notified of the Board of Governors meeting as per the NSL Handbook.”

The PSL BOG meeting is scheduled to take place at the Sandton Convention Centre next Thursday.

As Royal AM’s future hangs in the balance, questions arise regarding the fate of the Msunduzi Municipality’s agreement, which involved paying the club R9 million per season for a three-year deal, granting them free use of Harry Gwala Stadium for home matches.

Mayor Thebolla, during the agreement’s signing before the 2023/24 season, projected that the 15 matches Royal AM would play at Harry Gwala Stadium, along with cup competition matches, would generate R64 million annually.

“If Royal AM is no longer in the PSL, our relationship will end,” Thebolla told Sportswire. “Our agreement was contingent on them being a PSL club and utilizing Harry Gwala Stadium.”

Given the circumstances surrounding Royal AM, Thebolla was asked if the municipality regretted entering the partnership, considering club owner Shauwn Mkhize’s recent controversial reputation in football since acquiring Bloemfontein Celtic’s premier division status in 2021.

“Our decision was based on securing a PSL team, not specifically on MaMkhize. The council, empowered by both the mayor and the municipal manager, sought a PSL team,” he explained.

“Royal AM was located within our jurisdiction, so we had to engage with them first. We were prepared to explore partnerships with other KwaZulu-Natal teams and, if necessary, teams from across the country. We wanted to avoid Harry Gwala Stadium becoming a white elephant.

“The agreement with Royal AM mirrored our long-standing agreement with Maritzburg United when they were in the PSL. They understood that relegation would terminate the agreement. However, they are not relegated; but, should the PSL Board of Governors decide to terminate their membership as recommended by the executive, our relationship will end.”

MaMkhize and Royal AM’s current predicament stems from the club being placed under curatorship by Jaco Venter, appointed by the South African Revenue Service (SARS), due to alleged tax arrears of R40 million. Consequently, the PSL suspended all of the club’s matches, and they were excluded from the Nedbank Cup.

Royal AM’s last match was on 29 December, a 3-1 loss to TS Galaxy at Harry Gwala Stadium. They currently sit at the bottom of the league table with eight points from 11 matches.

After Durban businessman Roy Moodley’s attempt to purchase the club fell through, curator Venter informed the league that no other buyer could be found, leading the league to announce Royal AM’s impending membership termination.

“I’m commenting on this matter now because the club was under curatorship,” Thebolla continued.

“Curatorship and the club’s sale meant that any buyer would inherit its liabilities, including our agreement. We instructed our legal team to examine the implications. Our understanding was that any new owner would continue with our agreement until its conclusion.

“If the PSL finalizes the termination, we will have the opportunity to reassess the agreement, as it will become void. However, how can we penalize a non-existent entity? Our legal team will need to review this.”

The three-year sponsorship agreement, signed at Harry Gwala Stadium in 2023 in the presence of the media, involved Thebolla, MaMkhize, and her son Andile Mpisane. Therefore, MaMkhize and Andile are potentially liable for breach of contract.

Thebolla assured, “We will investigate this matter.”

In the meantime, Harry Gwala Stadium is being utilized by teams in the ABC Motsepe League.