SHEFFIELD Steelers owner Paul Ragan today promised to explain to fans why he broached the subject of off-shore bank accounts for his ice hockey players, last season.
Ragan addressed his Elite-League-winning skaters in their dressing room, telling them of a tax-mitigating scheme called Remuneration Trusts (RTs).
Trusts have been controversially used by football and other sporting clubs to pay their players.
The ice stars were promised they would receive their normal net salary amount but the company - which pays the Inland Revenue for them - would benefit from tax exemption.
Players have told The Star that the notion put to them was that a part of their salaries would be paid in the normal way - the rest would go overseas.
Fearful of the effect a seemingly-reduced traditional pay packet may have on their ability to get credit and mortgages in the future, the skaters did not like the deal and it was scrapped.
British and import players, alike, rebelled.
A player recalled: “After purchasing the team, Paul and Simon Hodgkinson (director at Ragan’s Rink Corp Ltd) came in the locker room before practice and discussed RTs with us.
“There was a concern this would hurt the players financially in the long term.
“The way I recall, it explained was this: If a player is making £500 per week net, the team is responsible for paying the taxes.
“However, if the player sets up an RT in their name, they could earn say £200 per week normally and the remaining would be paid through this Trust.
“This way, the taxes the team would be responsible for would be on £200 per week rather than £500 … a substantial amount when you add up all salaries over a 30-week season.”
The player said letters had been prepared and teammates were invited to go online and wire £100 of their own money into a Swiss Bank account. The club would then pay a portion of their wages into that Trust fund as a ‘loan’, he said.
One Sheffield Arena player saw the deal on the table as effectively a ‘tax-free loan’ of a portion of his salary, which he would never have to pay back. But he worried about the effect it may have on him financially when he retired.
Another player told The Star: “Paul and Simon figured the RTs would be worth pursuing because of the savings.
“We mentioned that, in the case of the British guys, this would have a pretty significant impact on their ability to secure a mortgage because if your monthly income goes from £2,000 a month down to £800 a month that is quite a difference.
“We also raised concerns about National Insurance contributions and the issue of a person’s credit history. We were worried that if we were given these loans, which ultimately go unpaid, that surely will have a negative impact on our credit history.
“We said we weren’t comfortable with it, they dropped it and it wasn’t mentioned again.”
The Star asked Ragan to confirm that talks were held with Sheffield players regarding loans via an RT, payable through Bay Trust International Ltd, Geneva, Switzerland.
He was also asked if the idea was to avoid the club having to pay as much tax.
The entrepreneur replied that RTs were ‘not a new thing’ and were ‘used by a number of sports clubs’.
He added he would be making the situation clear to Steelers fans but added: “Yes we did consider it as it was a facility being considered by the previous ownership in Cardiff Devils (his other Elite League club). That said, we did not pursue it once I took over Sheffield.
“I was informed it was a beneficial way to go and did discuss (RTs) with players as an option, but simply decided against it and never progressed it ... my decision.
“For the record, though, players were really cool with it ...”
Ragan chose not to discuss accusations surfacing on the internet that Steelers players having their wages cut (to ensure the club meets next year’s League wage cap) were receiving bigger housing allowances to compensate.
He concluded: “I have a Fans Forum being sorted in two weeks, and feel it only fair that we address the fans directly, as many untruths exist at the moment.”