Royal AM’s move to Pietermaritzburg, instigated by a financial incentive from the Msunduzi local Municipality, seems to reflect the monetary struggles faced by DStv Premiership club owners in the cut-throat business of running their teams competitively.
The club of flamboyant businessperson Shauwn Mkhize has been offered R27m over three seasons to ditch Durban’s Chatsworth Stadium and relocate to Harry Gwala Stadium in Pietermaritzburg. According to media reports, the proposal was approved by the council on Wednesday. The Premier Soccer League also released its official Premiership fixtures on Thursday and those reflected Harry Gwala Stadium as Royal’s home ground.
The stadium was used by Maritzburg United in their 17 seasons in the Premiership before last campaign’s relegation. The Team of Choice built up one of the best support bases for a small PSL club there, drawing good, vociferous crowds in the excellent atmosphere of their preferred “Friday Night Football” fixtures.
It was United’s relegation that triggered the end of their R9m a year “sponsorship” from the Msunduzi municipality, which has courted Royal as a replacement.
The phenomenon of local councils footing funds to retain PSL clubs in their city is an interesting and at times controversial one. Chippa United have managed a similar arrangement with the Nelson Mandela Bay council worth a reported R40m over three years. Clubs that battle to find sponsors have been accused of leveraging the prospect of an exit from a city to gain local government funding with taxpayers’ money. Teams and municipalities argue that a PSL club in a city the size of Pietermaritzburg or Gqeberha has economic spin-offs in the form of travelling fans using infrastructure such as hotels, bars and restaurants when big teams arrive in town, and television and media exposure.
Clubs’ battles to find sponsors seem part their responsibility, as the approaches to corporations can be clumsy and amateurish, and reports of poor management of their teams can be detrimental. There seems something, too, to the complaints made in 2018 by Free State Stars GM Rantsi Mokoena — whose family had to sell the team because they could not sustain the economic burden — that corporations largely remain unaware of the exposure available from sponsoring the biggest sport in the country, simply because their executives are fans of smaller sports rugby and cricket.
The plight of smaller football clubs in such an environment, amid an increasing turnover of sales of franchises post-Covid-19, would make for an interesting academic research project. And a case study of the storied Royal AM would make for some of the most interesting reading.
Tenderpreneur Mkhize is reportedly worth hundreds of millions of rand. The former star of a reality TV show popularly nicknamed “MaMkhize” and her club came into the Premiership all noise and exuberance, tinged with controversy. After a failed, prolonged court battle over a dispute with the PSL after being denied the 2020-21 first division championship over a points technicality, Royal bought the Bloemfontein Celtic franchise.
The team was traditionally based in Pietermaritzburg, where the multimillion-rand Royal Ranch is a glitzy facility, but played in Durban, as Maritzburg United continued to monopolise Harry Gwala Stadium.
In AM’s first season in the Premiership they flashed money and signed ostentatiously, winning hearts with attractive football that took them to third place. In the second, a series of eyebrow-raising administrative eccentricities, and reported cash flow problems that allegedly left players unpaid some months, saw them slip to 11th.
Speculation could be that the court process and cost of buying Celtic, and then such a flashy first season, added up. Royal perhaps have to learn to live within their means in the top-flight. Still, it begs the question: if MaMkhize is battling, what of other lesser-resourced clubs? Last season TS Galaxy and relegated Marumo Gallants were also reported to have battled to pay players, and Swallows FC the campaign before that.
An interesting question will be whether a R9m annual sponsorship is enough to plug leaks that might have sprung at Royal. New club owners often come into the PSL with eagerness but quickly find the burn to their pockets too hot.
Maritzburg United almost had that experience when they bought the Tembisa Classic franchise in 2005 and were relegated two years later. The Team of Choice admirably built themselves back and were promoted again within a season. And while there were hard administrative lessons still to learn, they grittily preserved their Premiership status for 15 seasons, improving their scouting and selling and establishing a good youth system. It was always a tenuous existence, though, and most seasons they increased the grey hairs on the heads of their owners and directors fighting the drop.
So Maritzburg owner Farook Kadodia is someone who knows plenty about the funding required for a small team in the cut-throat environment of the bottom half of the table. There teams walk a tightrope of spending just the right amount on a squad and coaches to preserve their status, but also just little enough for the budget to remain sustainable.
There’s always a concern of primary objective of providing timely payments and bringing players and coaches the fans can identify with, and that way you build a brand where people will support you, like we did with Maritzburg United.
— Farouk Kadodia
Kadodia said to achieve that without a club owner having to dig into his own pockets or sell big-name players each season would take sponsorship revenue of closer to R20m than R9m. From that statement it's possible to work out the region of the total annual cost. The R2.5m monthly grant from the PSL adds up to R30m a year. Gate takings are estimated at about R8m to R15m for small teams — Maritzburg's average attendance was about 7,000, so averaging ticket prices to R80, that's R560,000 per match, which for about 25 home games is R14m. So if Kadodia’s claim of the sponsorship amount needed is correct at R20m, then a ballpark revenue of about R60m to R80m, with some spare change and added merchandising income added, is needed annually to break even. Some years it might be more.
“There’s always a concern of a primary objective of providing timely payments and bringing players and coaches the fans can identify with, and that way you build a brand where people will support you, like we did with Maritzburg United,” Kadodia said.
“You must understand that if we sold so many players over the years, it’s because we invested in those players — our recruitment was good and all that came with costs. The infrastructure has to be very big. For a club to thrive, you need at least R20m sponsorship a season so that you don’t depend on selling players to survive.”
Kadodia was adamant that a major factor behind smaller teams struggling is that the PSL has gone for almost a decade without a permanent CEO, as Lamontville Golden Arrows chairperson Mato Madlala has filled the position in an acting capacity for just more than seven-and-a-half years. The United chair believes there’s a need for an independent CEO who will work hard towards projects that help smaller clubs attract sponsors, and find other ways of boosting their income.
“I think that for an independent CEO of the league, their priority has to be to make sure that we engage sponsors for all the unsponsored teams in the PSL,” he said. “If you look at the sponsorship committee and finance, years ago they used to take an interest in ensuring that teams that didn’t have sponsors received help finding them.”
It’s tough out there. The PSL might need to reimagine some aspects of its business model to promote stability and financial health among its smaller clubs.
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