The team is seeking a legal remedy for false promises after New York announced in early November that Staten Island is no longer part of its affiliation structure following a 21-year partnership.
The lawsuit is for $20 million, a source told Ken Davidoff of the New York Post.
Staten Island said it would be challenging to field a proper team without using minor leaguers from the Yankees' system. Business operations, such as payroll for players, coaches, and staff, would also be hampered significantly without New York's connections.
"The best thing we can do for the community is to step aside and let others try to save baseball in Staten Island," the former Single-A affiliate said. "While we have invested considerable resources into the development of the North Shore, and hoped to remain a piece of that renewal, we have not been offered support to create a sustainable business entity."
The team said a portion of any settlement or jury verdict will go to local charities, and all ticket purchases will be fully refunded.