The Rays new owner has a reputation of unflappability and surrounding himself with rising talents. And that was before he got involved in baseball.
By LOUIS HAU, Times Staff Writer
Published December 18, 2005
Stephen Levick vividly remembers observing Stuart Sternberg on the floor of the American Stock Exchange one day in the late 1980s when bad news sparked an early morning trading frenzy.
Sternberg, now the 46-year-old principal owner of the Tampa Bay Devil Rays, dealt in equity options used to hedge risk in stocks. Levick then worked for a rival firm.
"The stock was opening down 30 to 40 percent, just like you'd see in the movies, people screaming and yelling," Levick recalls. "And there is Stu. . . . And there is a smile on his face. And he's enjoying himself."
That unflappability is key to Sternberg's modus operandi as successful investor and now will be put to the test as principal owner of the Rays, say past and present business associates. His management philosophy, which includes entrusting bright young employees with big responsibilities early in their careers and giving them room to grow, served him well during a Midas-touched career on Wall Street. And it will be vital as he tackles his biggest challenge yet: improving the star-crossed fortunes of Tampa Bay's struggling Major League Baseball franchise.
"When we had any major risk situations, he was a great poker player," says Steven Starker, who, like Sternberg, is a former managing director of Spear, Leeds & Kellogg, the New York brokerage firm where Sternberg spent most of his career. "If you looked at him, you didn't know if he had $3 or $300,000."
Sternberg got an early jump on the competition, enrolling at St. John's University in Queens, N.Y., at 16. While at St. John's, he worked part-time at the specialist trading firm of Santangelo & Co. in New York. Sternberg quit school before graduating to work full-time at Santangelo and was eventually made a partner at the firm.
In the wake of the October 1987 stock market crash, Santangelo was acquired by the larger firm of Spear, Leeds & Kellogg. Sternberg rose in the ranks quickly, becoming a managing director and partner within two years.
The '87 crash left the market in a funk with fewer money-making opportunities for specialists such as Sternberg trading in equity options. But as he would later with the Devil Rays, Sternberg saw opportunity in bad times.
In an interview, Sternberg said he and his Spear Leeds colleagues used sluggish market conditions to acquire smaller rivals, recruit fresh talent into the ranks and to make sure they were prepared for an eventual upswing in the market.
"Everybody had to keep everything in perspective," he says, adding that he counseled his troops that "things might get worse but they will (eventually) get better."
Confidence in youth
It was during this period that Sternberg first pursued another strategy that would become a prominent part of his approach with the Rays: fast-tracking gifted young people to positions of authority.
Just as he would eventually name 29-year-old Matt Silverman as Rays president and 28-year-old Andrew Friedman as the team's executive vice president of baseball operations, Sternberg filled his equity options trading ranks at Speer Leeds with young talent.
"I've promoted many people before they thought they were ready, and that always seems to work better than promoting them when they feel they're ready," he says today.
Why? Because, Sternberg explains, "They come in with a more open mind, they're willing to be a bit more experimental."
Once a manager has an idea who he plans to promote, "There's no reason to wait and season them some more," he says. "It's better to throw them in there."
Putting relatively young people in positions of authority was a practice not unique to Sternberg at Spear Leeds, according to Timothy Mullen, a member of Sternberg's ownership group and, like Sternberg, a former Spear Leeds managing director and former member of the firm's executive committee.
"That was kind of the ethos of the company, especially in something that is as raw as the capital markets," he said. "Change is constant. Someone who wouldn't challenge orthodoxy was going to get left behind."
Silverman had been working in Goldman Sachs' firm-wide strategy group when the venerable Wall Street firm acquired Spear Leeds in October 2000. Silverman was assigned to work with Sternberg. In 2001, about six months after they got acquainted, the then-25-year-old Goldman Sachs associate was surprised and flattered when Sternberg asked him to help him run a new business venture at Spear Leeds.
Other commitments at Goldman prevented Silverman from accepting the offer, but Sternberg's overture made a big impression on him.
"That's an example of the type of trust and confidence that he has in people regardless of their age," Silverman says.
But while Sternberg gave ample opportunities to his promising charges for advancement, he didn't play the role of an indulgent older brother.
Larry Falcone, a former limited partner at Spear Leeds who worked with Sternberg, recalls that the Rays owner was "cool, calm and collected, always under control, even in the busiest of circumstances."
But "by no means was he a softie," Falcone adds with a laugh. "He was tough when he had to be but he gave people a chance to succeed. . . . I don't think you want to be in an environment where you fear your boss. But he was the boss and he made the decisions."
Inevitably, some of those decisions weren't popular with those he worked with. Ex-Wall Streeter Levick, now a member of the Rays' new ownership group, recalls a time when Sternberg awarded him with an annual bonus.
"I felt it should have been more," Levick says. "He felt it did reflect what I had done. . . . He's tough and fair. Someone has to be the adult."
Spear Leeds had periodically run into trouble with market regulators due to alleged illegal trading practices by some of its executives. Sternberg was never implicated in any improper trades.
"We were fortunate to manage the firm through a lot of scrutiny," he says.
"A wide berth'
While Sternberg is a demanding taskmaster, it isn't his style to micromanage.
Silverman says he is constantly in touch with Sternberg. "Whether it's in person, by phone, via e-mail or instant messaging, there is a very consistent dialogue," he says. But he adds that Sternberg gives him broad latitude to run the Rays' day-to-day business operations.
"We talk philosophy, we talk direction and priorities and then we as an organization make decisions," Silverman says. "And we know which ones should go back to him for his final stamp of approval and which ones we should just tell him about or sometimes let him read about in the papers."
One of Sternberg's biggest roles is raising pertinent questions, "questions that others wouldn't think of asking," Silverman says. "He tests and he probes and that's how he helps us all get to the right answers."
Sternberg says that once he sizes up the capabilities of the people he works with, he prefers to stay out of their way and provide assistance when they run into rough patches.
"You have to get a real sense of people and give them a wide berth," he says. "You want them to make mistakes. They will learn from them," he adds.
And when mistakes occur? Says Sternberg: "I think that my role is that of a shock absorber."
In the meantime, Sternberg is confident he and his team will lead the last-place Rays to better days.
"I think I'll be a great shepherd when we get there," Sternberg says. And when we do, he adds, "People will remember the bad times and appreciate what we accomplished."
Times researchers John Martin and Cathy Wos contributed to this report. Louis Hau can be reached at firstname.lastname@example.org or 813 226-3404.