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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Manchester United worries about compliance too

In a recent filing with the SEC, Manchester United plc described its relentless international expansion and the risks consequently faced from the Foreign Corrupt Practices Act, the UK Bribery Act, and similar anti-corruption laws.

The club now claims 1.1 billion fans and followers worldwide. It’s valued at about $3.9 billion, with revenue last year of $770 million. About $212 million of that revenue came from sponsorships and $125 million from merchandising and licensing. The rest is from ticket sales and broadcast rights.

In August 2012, Manchester United plc (a Cayman Islands company) became an “issuer” for purposes of the FCPA when its late owner Malcolm Glazer did an IPO on the New York Stock Exchange (NYSE: MANU).

A Form 20-F filed last month said the club intends to continue to expand internationally and “operate in select foreign markets.”

That expansion brings both compliance risks and operational burdens.

In many foreign countries, particularly in certain developing economies, it is not uncommon to encounter business practices that are prohibited by certain regulations, such as the UK Bribery Act 2010, the U.S. Foreign Corrupt Practices Act, and similar laws.

Man U said it (and its subsidiaries) “have undertaken compliance efforts” with respect to the FCPA and UKBA.

Despite that, its employees, contractors and agents, as well as companies that provide outsourced services, “may take actions in violation” of the club’s anti-corruption policies and procedures.

Any such violation, even if prohibited by our or our subsidiaries’ policies and procedures or the law, could have a material adverse effect on our reputation, results of operations, financial condition and the price of our . . . shares.

Complying with foreign laws and legal standards means there has to be more financial reporting, the club said. That in turn increases the “burden and complexities” for the organizaiton.

Manchester United plc said its international expansion brings plenty of other risks.

Foreign regulatory requirements will be unfamiliar, for example, and will expose the club to “unexpected changes” in the law. Difficulties managing and staffing international operations are a risk, as are “fluctuations in foreign exchange rates, potentially adverse tax consequences, and restrictions on repatriation of earnings.”

Moving deeper into international markets requires “significant management attention and financial resources,” Man U said. “The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability.”


Richard L. Cassin is editor at large of the FCPA Blog.

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