Robert Kraft Among Sports Team Owners Who Appear In The Paradise Papers

The offshore holdings of New England Patriots’ owner Robert Kraft, along with those of several other American sports owners, have been discovered in the Paradise Papers—the millions of leaked documents that detail the international financial data of some of the world’s largest corporations and wealthiest people—according to the Guardian. These holdings could have been used to reduce U.S. taxes or avoid paying them altogether.

Along with Kraft, the other named owners are Micky Arison of the Miami Heat, Steve Pagliuca of the Boston Celtics, and Peter Karmanos of the Carolina Hurricanes. Kraft is listed as having a holding company and bank accounts in Bermuda. His firm pays no taxes on profits, income or dividends, in return for an annual fee, and Bermudan authorities would have promised to keep his ownership strictly confidential. The value of Kraft’s holdings was undisclosed.

A spokesperson for the Patriots’ owner claimed to The Guardian that the company had only been established to more easily facilitate business with certain customers and handled relatively small amounts of money. The spokesperson denied any tax-based motivation for the company’s establishment.

The Heat’s Micky Arison was identified in the documents as director of an insurance subsidiary of Carnival Corporation, the massive cruise operator where Arison serves as chairman. As the,

Forming a captive insurance company in Bermuda, which has no corporation tax, can lower a corporation’s tax bill. The insurance premiums that a company pays to its in-house insurance firm may be tax-deductible. The premiums themselves remain within the corporation, without being taxed as profits would be. Companies are not required to make the captive insurer’s accounts public.

In 2015, the US Internal Revenue Service (IRS) included the use of captive insurers on its “ dirty dozen” list of tax schemes and said it was looking into potential abuse of the system. The same year, Arison’s Trident Insurance Company was inducted into Bermuda’s Captive Hall of Fame, which marks contributions to the island’s economy.

A spokesperson for Arison also denied that there was a significant tax benefit to the arrangement.

The Hurricanes’ Peter Karmanos, the founder of Compuware, was also found to be director of an offshore subsidiary in Barbados from 1988 to 2011, when the company was dissolved just before his retirement. That subsidiary, as a foreign sales corporation, paid no taxes to Barbados authorities.

Steve Pagliuca, of the Boston Celtics appears in the papers as one of the holders of Virgin Voyages, a cruise company incorporated in Bermuda.