Lawsuit: Sternberg schemed against Rays’ minority partners

A lawsuit filed in Pinellas County Circuit Court alleges Tampa Bay Rays principal owner Stu Sternberg engaged in a “relentless scheme” to squeeze out the limited partners in Tampa Bay Rays Baseball, the organization that owned the Rays.

The lawsuit, filed Saturday by five limited partners, said the scheme culminated in Sternberg’s “surreptitious transfer” of the entire baseball club and franchise to a separate entity, called  Rays Baseball Club, a limited liability corporation of which Sternberg is the sole member, according to the lawsuit.

The Rays issued a brief statement Tuesday afternoon responding to the lawsuit. The statement said: “We are disappointed that a handful of our limited partners have filed suit. The suit is deceptive and inflammatory and is fraught with error and falsehood. We have abided by the partnership agreement and the Tropicana Field use agreement.”

The five limited partners who filed the lawsuit are:

• The MacDougald Family Limited Partnership, with a 1.33 percent limited partner interest in Tampa Bay Rays Baseball, which is referred to as the “partnership” in the lawsuit

• Stephen Mitchell Waters 2020 MLB Irrevocable Trust agreement, with a 0.4 percent limited partner interest

• Stephen M. Waters, with a 0.7 percent limited partner interest

• Gary Markel, with a 2.15 percent limited partner interest

• Robert Kleinert, with a 5 percent limited partner interest

The partnership was originally founded by the former Rays owner, the late Vince Naimoli, to bring a Major League Baseball franchise to Tampa Bay.  The partnership owned and operated the Tampa Bay Rays baseball club until January 2020, the lawsuit said.

Sternberg, through a company he controls called 501SG, acquired a 49 percent interest in the partnership in 2004 by buying the interests of several dissatisfied general partners, the lawsuit said. It alleges that Sternberg entered into a “secret series of contracts with Naimoli,” and gained control of the partnership over time. The lawsuit outlines a series of acquisitions of limited partner interests from 2007 to 2018 giving an additional ownership stake to Sternberg.

The partners who filed suit said they did not learn about the transactions until January 2020.

“Plaintiff’s concerns were further justified when they discovered that Sternberg has been secretly negotiating to sell an interest in the franchise and club to a Canadian businessman named Stephan Bronfman and his Montreal Baseball Group,” the lawsuit said. “Insultingly, based on information and belief, these secret negotiations have been going on since the spring of 2014.”

The lawsuit asks that a receiver be appointed to determine how much money or damages is owed to the partners in Tampa Bay Rays Baseball. It also alleges breach of contract, breach of fiduciary duty and constructive fraud and asks for a declaratory judgment against Sternberg and Rays Baseball Club.

NOTE: This story has been updated since its original publication to include a statement from the Tampa Bay Rays.