ST. PETERSBURG, Fla. — A group of minority owners of the Tampa Bay Rays has filed a lawsuit against the team’s principal owner, Stu Sternberg, accusing him of breach of contract and constructive fraud.
According to the lawsuit filed Saturday in Pinellas County, Sternberg allegedly engaged in a “relentless scheme to squeeze out the limited partners and usurp partnership opportunities.”
Attorneys representing five minority owners state Sternberg transferred the baseball club and franchise to a separate entity called "Rays Baseball Club, LLC," of which, Sternberg is the sole member, according to court documents.
The minority partners claim they were charged significant management fees believing Sternberg and his company, 501SG, were at least “safeguarding the interests of the limited partners.”
The lawsuit goes on to state Sternberg misappropriated money from the Partnership by secretly paying himself and several of his 501SG investors' salaries from the Partnership, then saddled the limited partners with massive tax obligations and purchased shares from estates under manufactured pressure scenarios.
The five minority owners hold a 9.5 percent stake in the team, according to court documents.
YOU CAN READ THE FULL LAWSUIT BELOW:
“One thing about limited partners, they didn’t sign up to be stolen from or lied to but they didn’t sign up to have much control, either,” said sports attorney Mike Gallagher.
Gallagher, who is not affiliated with the case, is a former player and scout who has spent decades representing athletes and franchises.
“I’m sure the majority owner has some side of a story to tell that doesn’t line up with the allegations so I think you’re going to have to sit back and see how it all plays out," Gallagher said.
The lawsuit also states Sternberg held a 49 percent stake in the team in 2004, but quietly increased his ownership to 85 percent as of 2020 due to “high-pressure transactions with other limited partners.”
It also states Sternberg began “secretly negotiating” to sell an interest in the team to Canadian businessman Stephen Bronfman back in 2014, years before Sternberg would publicly pitch splitting the team’s home season between St. Petersburg and Montreal.
“Insultingly, based on information and belief, these secret negotiations have been going on since the Spring of 2014,” the lawsuit states.
On Monday, St. Petersburg Mayor Rick Kriseman released the following statement, calling on Sternberg to step down from the organization.
“The verified legal complaint against Tampa Bay Rays Principal Owner Stu Sternberg is very concerning. As it relates to the City of St. Petersburg, we will carefully review the complaint as it appears to give rise to the question of whether the Rays Organization has defaulted on our use agreement. Regardless, Mr. Sternberg should consider relinquishing control of the organization. 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.”
May 24, 2021
Tuesday the Rays responded with the following statement:
The Tampa Bay Rays have issued the following statement: pic.twitter.com/ICP0dShCzM
— Tampa Bay Rays (@RaysBaseball) May 25, 2021