Royal AM's pending expulsion from the Premier Soccer League (PSL) may not only be a major blow for Shauwn Mkhize, but also for the South African Revenue Service (SARS) in their quest to recoup the millions owed to them.
The league’s executive committee has resolved to terminate the club’s membership from the top-flight. The decision will now go to a vote at next week’s board of governors meeting.
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A circular sent to club owners explained the reasoning behind the Exco’s decision, highlighting Royal AM’s “failure to meet its obligations to the league, misrepresentation of key information in a renewal application, and an unauthorised share transfer that went against the NSL constitution”.
SARS placed the club under curatorship in an effort to recover a R40 million tax debt linked to a family trust associated with club president Mkhize.
With the uncertainty surrounding the club, as they weren’t able to fulfil their fixtures since the start of the year after players went on strike because of non-payment of salaries. The PSL responded by suspending all of Royal AM playing activities.
The appointed curator attempted to resolve the situation by selling Royal AM’s Premiership status, but a deal with Durban businessman Roy Moodley collapsed at the last minute after the prospective buyer failed to meet the PSL’s vetting requirements, and could not produce the necessary deposit to finalise the sale.
Now, the club will essentially be a lot less if Royal AM is expelled from the league, as the club’s worth was determined by them competing in the Betway Premiership, the top flight of South African football.
Mkhize bought Bloemfontein Celtics’ top-flight status in August 2021 for around R50 million and moved the team to KwaZulu-Natal from the Free State. But, if the Exco’s decision is ratified next week, the club will pretty much be worth nothing, which would be a massive loss for Mkhize and SARS.
SARS may now continue to pursue Mkhize personally for the outstanding amount, but they may struggle to recoup most of the money as Royal AM is probably her biggest asset
If the club’s expulsion is finalised and no further value can be extracted from their PSL status, SARS could target Mkhize’s personal or business assets to recover the debt. This could lead to further legal battles or asset seizures for the beleaguered business woman and reality TV star.
Expulsion could accelerate liquidation of the club after the curator’s attempts to sell the club’s PSL status failed. Assets tied to Mkhize’s family trust, such as sponsorship, training facilities and player contracts might be auctioned off to settle debts, potentially dissolving the club entirely.
Players have already begun leaving, with the PSL Dispute Resolution Chamber declaring several players free agents due to unpaid salaries. Expulsion would likely void remaining contracts, freeing all players to join other clubs.
Essentially, Royal AM’s time as a football club could be up, and SARS would still not have recouped their R40 million.
@JohnGoliath82