Rays Minority Owners Sue, Allege Fraud Against Principal Owner, per Report
Several Rays minority owners are suing Rays majority owner Stu Sternberg claiming that their power as owners “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 Athletic’s Evan Drellich reports.
This is the third lawsuit that this select group of owners have filed against Sternberg and argues that Sternberg committed fraud and violated Florida’s Unfair and Deceptive Trade Practices Act, per Drellich.
Among the claims in the latest suit is that Sternberg didn’t communicate that the team’s regional network Fox Sports Sun—now known as Bally Sports Sun—paid $376 million after Sternberg took over, according to The Athletic. That money was reportedly never distributed as “net cash flow,” and the minority owners claim they’ve been paying taxes without accumulating “appropriate distributions” from the team.
The group of owners own 9.6% of the team and includes Robert Kleinert, Gary Markel, Stephen M. Waters, the MacDougald Family Limited Partnership, and a trust headed in Waters’s name. They first filed a lawsuit against Sternberg in March 2021 alleging that the Rays owner created a “scheme to squeeze” out the other partners starting in 2004.
The group then filed their second lawsuit in February arguing that they received documents “with obviously altered dates,” per The Athletic.
“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,” managing partner of Englander Fischer Courtney Fernald said.
“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.”
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