Tampa Bay Rays minority owners sue Sternberg, say he secretly negotiated Montreal deal

The partners allege that Sternberg was in talks with Canadian investors since 2014.
Aerial photo taken of Tropicana Field on Wednesday, Oct. 16, 2019 in St. Petersburg.
Aerial photo taken of Tropicana Field on Wednesday, Oct. 16, 2019 in St. Petersburg. [ LUIS SANTANA | Times ]
Published May 24, 2021|Updated May 24, 2021

A group of minority owners of the Tampa Bay Rays have filed a lawsuit against Stuart Sternberg, the principal owner, alleging he has been engaged in a “relentless scheme” to take over control of the team and began secretly negotiating to sell an interest in the Rays to Montreal investors in 2014 — years before it was publicly disclosed.

If true, city officials said those discussions could have violated the exclusivity clause woven into the team’s Tropicana Field lease. The Rays must play all their home games in the Trop through the 2027 season and are barred from even negotiating to play elsewhere during the agreement term.

The suit, which was filed Saturday in Pinellas County, accuses Sternberg of depriving the minority owners of their profits from the team while simultaneously requiring them to pay taxes on that would-be income.

That tactic squeezed out some partners, forcing them to sell their shares to Sternberg at a fraction of their value, the plaintiffs said. In January 2020, he transferred “the entire baseball club and franchise” to a new company under his sole management, without notifying the other partners, the lawsuit says.

Lenda Naimoli, the widow of original Rays owner Vince Naimoli, and the estate of the late Lance Ringhaver sold their shares as a result of the “no distributions/looming tax liability strategy,” according to the suit, though neither are plaintiffs in the case.

Tampa Bay Rays owner Stu Sternberg.
Tampa Bay Rays owner Stu Sternberg. [ LUIS SANTANA | Times ]

The suit comes at pivotal moment in the relationship between the Rays and St. Petersburg. City officials are entrenched in ongoing negotiations with the team over where it will play in 2028 and beyond — whether in a new stadium on the Tropicana Field site or elsewhere, and for a full season or a split-season with a companion ballpark in Montreal.

Also, the uncertainty surrounding the Rays has all but halted the progress Kriseman hoped to make in redeveloping the Tropicana Field site; City Council members last month said they would not entertain an agreement with a developer for the project until the Rays have made clear their intentions.

St. Petersburg Mayor Rick Kriseman called the suit “very concerning” and suggested Sternberg should “consider relinquishing control” of the team. He also said the suit “appears to give rise to the question of whether the Rays Organization has defaulted on (Tropicana Field’s) use agreement.”

“The residents of St. Petersburg and fans of the Rays should not be made to wait any longer for clarity related to the future of the team in Tampa Bay or redevelopment of the Tropicana Field site,” Kriseman wrote in a statement.

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The suit requests a jury trial, a receiver to be appointed to review the partnership’s finances, more than $30,000 in damages and for Sternberg’s company to be expelled as general partner.

Leonard Englander, the St. Petersburg attorney who filed the suit, declined to comment.

It was filed by Robert Kleinert, Gary Markel, Stephen M. Waters and a trust bearing his name, and the MacDougald Family Limited Partnership, LLLP. Collectively, they own just under 9.6 percent of the team, according to the lawsuit.

Sternberg had a 49 percent stake in the team in 2004 when he became its managing partner, but has increased his ownership to 85 percent as of 2020, the plaintiffs said. Sternberg ascended to managing partner in exchange for “a secret series of contracts” with Vince Naimoli, who ceded his position in return for being paid “management fees” for 12 years, the suit alleges.

Sternberg did not return calls or text messages to a spokesperson seeking comment.

While Sternberg was quietly acquiring more stakes in the team, “insultingly,” he was also “secretly negotiating” to sell an interest to Canadian businessman Stephen Bronfman and his Montreal Baseball Group starting in the spring of 2014, the plaintiffs said.

Sternberg has previously told the Tampa Bay Times that the conversations with Bronfman began in about 2017. A spokesman for Bronfman did not immediately respond to an email asking for comment.

Related: Did the Rays' talks with Montreal violate the Tropicana Field lease?

This isn’t the first time questions have been raised about Sternberg’s conversations with Bronfman and whether they violate the terms of the city’s agreement with the team. Former city attorney John Wolfe, who negotiated the Trop agreement for the city, said in 2019 that whether Sternberg’s conversations with Bronfman violated the exclusivity clause would depend on how specific they got.

City leaders said at the time they did not consider those talks a violation, but the suit indicates they may not have known the extent of those conversations.

The suit also claims that in 2020, the team, which is known to creatively pinch pennies on the field, had “$400 million in cash.” It further claims that two unnamed team presidents benefited from loans and other payments, and that Sternberg “refuses to disclose” to the plaintiffs what the two presidents’ salaries are.

The Rays currently have two team presidents, Matt Silverman and Brian Auld. Neither returned calls and text messages for comment.

Times staff writer Jay Cridlin contributed to this report.