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Rays partners sue Sternberg again, alleging ‘fraudulent’ control of team

Five minority partners claim the Rays’ owner transferred the team to his own company without their input.
Tampa Bay Rays principal owner Stuart Sternberg speaks to members of the media on Opening Day at Tropicana Field in St. Petersburg on April 8. For the third time in just over a year, minority owners in the Rays franchise sued Sternberg on Monday in Pinellas-Pasco Circuit Court, alleging he wrested control of the team away from their voting interests as partners.
Tampa Bay Rays principal owner Stuart Sternberg speaks to members of the media on Opening Day at Tropicana Field in St. Petersburg on April 8. For the third time in just over a year, minority owners in the Rays franchise sued Sternberg on Monday in Pinellas-Pasco Circuit Court, alleging he wrested control of the team away from their voting interests as partners. [ IVY CEBALLO | Times ]
Published Jun. 29|Updated Jun. 29

For the third time in just over a year, a group of minority partners in the Tampa Bay Rays have sued principal owner Stuart Sternberg, alleging he “wrongfully and surreptitiously” transferred control of the team to his own company without those partners’ knowledge.

Five partners who collectively own about 9.6 percent of the team filed the new lawsuit Monday in Pinellas-Pasco Circuit Court, claiming the “fraudulent transfer” of the team to a company controlled by Sternberg “reduced to a mere shell” their partnership.

“These actions have stripped (the minority owners) of the value of their long-held investments in the franchise and team,” the suit states.

The five partners — Robert Kleinert, Gary Markel, the MacDougald Family Limited Partnership, Stephen M. Waters and a trust in Waters’ name — had previously sued in May 2021, alleging Sternberg had been trying to squeeze owners out of their stake and profits in the team, while asking them to pay taxes on the team’s income. In March, a judge ruled that part of that lawsuit, seeking to oust Sternberg as a general partner, can proceed in court, with the rest going to arbitration.

Related: Pinellas judge rules part of Rays ownership lawsuit can proceed in court

This February, the partners sued companies held by Sternberg and others, alleging they withheld documents key to their review of the team’s finances. Sternberg’s attorneys have sought to have that suit dismissed. A hearing on the matter is scheduled for September.

Related: Rays minority owners sue Sternberg again, saying team withheld income records

All three lawsuits list as a defendant Rays Baseball Club LLC, the limited liability company managed by Sternberg that legally owns the franchise. But the latest one puts that company front and center.

According to the suit, Sternberg transferred control of the team to Rays Baseball Club at the start of 2020, unbeknownst to the other partners, who say they didn’t find out about it for more than a year. And it wasn’t until March 2022 that the partners, after reviewing long-sought financial audits, say they realized their rights within Rays Baseball Club had been curtailed, giving them “no revenues from baseball-related operations, no cash flow, and no responsibilities of the management of the Rays team and franchise.”

The lawsuit claims Sternberg violated Florida’s Deceptive and Unfair Trade Practices Act and seeks damages in excess of $30,000. It also asks a judge to void the deal that transferred the team to Rays Baseball Club; to issue an injunction limiting that company’s business actions; and to distribute payments to the partners based on that company’s cash flow.

According to the lawsuit, that cash flow could be significant. It describes a $376 million payment from an investment in Fox Sports Sun that the minority owners say went “directly” to Rays Baseball Club and not their partnership.

A Rays spokesperson declined to comment on the team’s or Sternberg’s behalf.

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