High Court Orders Shauwn Mkhize to Repay R27 Million Royal AM Sponsorship from Msunduzi Municipality

• The Pietermaritzburg High Court has declared the R27 million Msunduzi Municipality sponsorship to Royal AM unlawful and ordered repayment
• Deal faced strong opposition from residents and the Democratic Alliance, which took the matter to court
• Municipality to recover funds from Royal AM, already battling a R40 million SARS tax crisis

The Pietermaritzburg High Court has reportedly ruled that the R27 million sponsorship deal between the Msunduzi Municipality and Shauwn Mkhize’s former club, Royal AM, was unlawful and ordered Mkhize to pay back the money.

In her ruling, Judge Nontuthuzelo Mlaba stated that it appeared the municipality sought marketing, promotion and public relations benefits from its association with Royal AM.

“These are services that any other soccer club based in KwaZulu-Natal could have been interested in, given the benefits they would gain from the sponsorship contract. The opportunity was, however, not made available to other KZN soccer clubs.

“The submission by counsel for the municipal respondents was that Royal AM was the only club identified, but no reasons were given as to why it was Royal AM in particular that was chosen.

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“This was not in line with Section 217 of the Constitution, which requires that the sourcing of such services be transparent, competitive and fair,” she said.

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The municipality cancelled the deal three weeks ago after it sparked public outrage and strong opposition from political parties such as the Democratic Alliance (DA). Residents also opposed the agreement and have welcomed the ruling.

“We’ve been against the sponsorship from the start,” said Anthony Waldhausen, CEO of the Msunduzi Association of Residents, Ratepayers and Civics (MARRC).

“Now, we’re looking forward to the municipality taking steps to recover the money owed. That funding should be redirected to urgently needed service delivery.”

DA takes Royal AM to court

The DA labelled the sponsorship illegal and took Royal AM to court in October 2023 in an attempt to nullify the agreement.

Confirming the decision, ANC Chief Whip in Msunduzi, Sandile Dlamini, said the matter was discussed during a full council meeting on Wednesday. He added there was nothing unusual about the process, as it was handled under a confidential agenda item.

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Dlamini explained that the agreement was based on the club’s participation in the PSL. Since it no longer competes in the league, the decision to terminate the deal was deemed necessary.

The DA also released a statement celebrating the termination of the sponsorship.

Details of the deal

The agreement, which came into effect in July 2023, stipulated that payments would be made in annual instalments of R9 million until the end of the 2025/2026 financial year. The first instalment was paid in July 2023, with the second due in July 2024. In return, the city was expected to benefit from increased attendance at the Harry Gwala Stadium.

Neither Mkhize nor Royal AM's general manager, Richard Makhoba, has responded to questions. The Msunduzi Local Municipality has also not commented.

Financial strain on Royal AM

The ruling will prompt the municipality to begin the process of recovering the R27 million from Royal AM, which is already facing financial difficulties, including a R40 million SARS tax crisis.

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Shauwn Mkhize loses legal bid to reinstate Royal AM

Briefly News previously reported that former Royal AM owner and President Shauwn "MaMkhize" Mkhize has reportedly lost her latest bid to have the Premier Soccer League reinstate her club back to the league after being expelled.

This is not the first time Mkhize has taken the league to court, with her previous legal attempt also being unsuccessful and leading to the PSL’s confirmation of booting the KwaZulu-Natal-based team out of top-flight football.

Source: Briefly News