A group of Tampa Bay Rays minority owners has filed a third lawsuit against lead owner Stu Sternberg, alleging that their ownership “has been reduced to a mere shell, with no revenues from baseball-related operations, no cash flow, and no responsibilities of the management of the Rays team and franchise to the Limited Partners.”
The new lawsuit includes claims of fraud and a violation of Florida’s Unfair and Deceptive Trade Practices Act.
The Rays declined comment. Major League Baseball did not immediately respond to a request for comment.
The plaintiffs have alleged in multiple lawsuits that Sternberg transferred the Rays into a different business entity, Rays Baseball Club, without their knowledge. In March 2021, the same five owners — Robert Kleinert, Gary Markel, the MacDougald Family Limited Partnership, Stephen M. Waters and a trust in Waters’ name — filed a lawsuit that alleged a “scheme to squeeze out the limited partners” starting in 2004. The group owns about 9.6 percent of the Rays.
All counts in the original lawsuit but one, a request to expel Sternberg as general partner, were sent by the judge to arbitration. In May, in an attempt to dismiss that count, lawyers for Sternberg argued that the minority owners’ complaints “amount to nothing more than the personal grievances of limited partners.”
A second lawsuit, filed in February, alleged the partners had been provided with documents “with obviously altered dates” and had not been provided some documents at all.
"As stated in the complaint," said Courtney Fernald, managing partner of Englander Fischer, "since filing the first action on behalf of the partnership to remove Mr. Sternberg's company as managing partner of the Rays, our clients learned that in transferring the baseball club and franchise into RBC, Sternberg stripped them of their individual ownership rights in the team, and at the same time relieved himself of his obligations to safeguard their long term investment. What was represented as merely moving assets to a wholly owned subsidiary was in fact a targeted plan to eliminate our clients' individual rights, while allowing broader rights than those provided under the partnership agreement, necessitating this individual lawsuit."
The newest lawsuit alleges that Sternberg did not disclose that a $376 million payment from the team’s regional sports network, Fox Sports Sun (now known as Bally Sports Sun), had been received after the ownership of the team and had been transferred into the new entity.
“Thus, unbeknownst to Plaintiffs, those funds would not become part of the Partnership's revenues or ‘net cash flow’ calculations,” the plaintiffs said.
The minority owners have claimed they have been hit with taxable income without receiving appropriate distributions from the team.