Tampa Bay Rays Strike Concession Company with Contract Suit
On December 8, 2017, the Tampa Bay Rays baseball club filed a lawsuit in the Middle District of Florida against Centerplate Inc., formerly known as Volume Services Inc., for breach of contract involving their 20-year exclusive concession agreement at Tropicana Field. Volume Services entered the contract with the baseball club a year before the Tampa Bay Rays’ first game in 1998, but were unable to reach an agreement to extend the contract after the 2017 season. The baseball club alleged damages over the course of the contract for breaches of contract, breach of good faith and fair dealing, negligence, and failure to return control of Tampa Bay Rays’ property in an agreed-upon condition.
Many of the Tampa Bay Rays’ claims relate back to the club’s ability to compete with other teams. The Rays’ have struggled to compete in one of the league’s smallest markets, especially against fellow teams the New York Yankees and the Boston Red Sox. The baseball club alleged that Centerplate acknowledged errors or breaches of their performance, but resisted fixing the issues. One of these issues was the Tampa Bay Rays finding an error in Centerplate’s 2008 season sales reporting. Later on, Centerplate admitted it owed the team more than $200,000 for incorrectly recorded credits. In addition, the Tampa Bay Rays alleged Centerplate made improper cost deductions, artificially inflated staff costs, and mislabeled concession stands in financial statements. These allegations, amongst others, caused the Tampa Bay Rays to get less than its fair share of profits. Moreover, the Tampa Bay Rays are seeking reimbursement for being forced to pay for its own defense in a lawsuit brought by a fan that was injured by a concession stand sign falling on his head. The sign was part of Centerplate’s responsibilities to maintain concession areas and indemnify the team in those circumstances, but Centerplate refused to do so.
In addition to financial claims, the Tampa Bay Rays alleged misconduct related claims. In 2010, 2013, and 2017, ESPN, ABC News, and Sports Illustrated, respectfully, reported on Centerplate’s concession operations at Tropicana Field, concerning serious food violations. In preparing the facilities for a new concessionaire, the team stated it found many additional health and safety problems. In 2015, the Tampa Bay Rays’ were contacted by an individual that stated Centerplate had employed a registered sex offender. And just late last month, the St. Petersburg police told the team that Centerplate had brought in employees from a nearby halfway house for recovering addicts, some of which were possibly against their will. Further, some concession workers attempted to sell beer earlier than zoning laws allowed due to misinformation in their employee training. Poor oversight was further evidenced with a senior Centerplate staff member that oversaw operations in 2010, who “demonstrated poor judgment” with his alcohol use and often called a team executive late at night to provide incoherent reports on the night’s events. The team also claimed to have suffered reputation damages in 2014 when a video surfaced of the Centerplate CEO, Des Hague, kicking a dog in an elevator.
The Tampa Bay Rays also addressed that they attempted to resolve the issues extra-judicially for years because Centerplate continued to make representations that it would improve its performance and follow the agreement. However, the team stated it continues to find failures to properly maintain the concession equipment and facilities and the team will suffer damages as a result for several years. In response to the suit, Centerplate stated it was surprised by the lawsuit and suggested it came from ill-will toward their inability to agree on extending the contract. Centerplate stated, “After failing to come to financial terms on a new deal this season, we expected an orderly and amicable transition based on a tenure characterized by good relations and mutual respect. There is no basis for this last-minute action and we intend to vigorously defend our reputation in court.”