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A group of the Tampa Bay Rays’ minority partners filed suit against principal owner Stuart Sternberg this week, alleging he improperly enriched himself by secretly transferring operational control of the MLB franchise to an entity he controlled.
The legal spat centers on the minority owners’ claim that Sternberg “wrongfully and surreptitiously” transferred legal ownership of the team in 2020 from an existing partnership structure to an entity called “Rays Baseball Club.” The partners say they did not learn about the transfer until months after it occurred.
“These actions have stripped plaintiffs of the value of their long-held investments in the franchise and team,” the lawsuit says.
The minority owners participating in the lawsuit against Sternberg are listed as the MacDougald Family Limited Partnership, Stephen Waters, a trust in Waters’ name, Robet Kelinert and Gary Markel. They collectively own less than 10% of the Rays franchise.
The Rays minority partners are suing Sternberg for violation of Florida’s Unfair and Deceptive Trade Practices Act and unjust enrichment and fraudulent transfer.
The lawsuit alleges, among other claims, that Sternberg and the Rays Baseball Club entity failed to disclose a $376 million payment from regional broadcast partner Fox Sports Sun, which was “received after the ownership of the club and franchise had been transferred out of the partnership and into RBC.”
The partners accuse Sternberg of having “intentionally concealed” the existence of the Rays Baseball Club entity.
“The effect of all of this is that the partnership 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 very reason the limited partnership was formed,” the lawsuit said.
The Rays and an MLB representative declined to comment on the lawsuit.
“What was represented as merely moving assets to a wholly owned subsidiary was in fact a targeted and concealed plan to eliminate our clients individual rights, while allowing both RBC and Sternberg broader rights than those provided under the partnership agreement, necessitating this lawsuit,” said Courtney Fernald, a member of the legal team representing the minority owners and managing partner at Englander Fischer.
The Athletic was first to report on the lawsuit.
The latest filing marked the third time this year that the minority owners have sued Sternberg during an escalating legal battle over control of the Rays.
The same partners also sued Sternberg in May 2021 and accused him of engaging in a long-running “scheme to squeeze out the limited partners” and seize full control of the franchise, the Tampa Bay Times reported.
The Rays rank among the least valuable MLB teams, with an estimated valuation of $1.1 billion according to Forbes’ calculations.
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