It’s changing into clear by 4 days of the 23XI Racing and Entrance Row Motorsports v NASCAR antitrust trial that the now defunct SRX sequence will play a task in figuring out within the final result of the case within the eyes of the jury.
In questioning NASCAR executives (president) Steve O’Donnell and (EVP-strategy) Scott Prime over the previous two days, 23XI and FRM legal professional Jeffrey Kessler has began to color an image that the Sanctioning Physique’s management grew to become more and more conscious of a possible competitor sequence and reacted to it in tangible method.
That is vital as a result of this case, as determined by a jury, will reply partly if NASCAR is utilizing its place as a monopoly within the premier Inventory Automobile racing house to hurt competitors or these working within the house, just like the groups.
So the truth that Famous person Racing Collection retains arising within the line of questioning is extra sign than noise.
NASCAR began to point out concern about SRX through the summer time of 2022, through the second season of the midweek quick monitor sequence, because it negotiated with groups over the phrases of the constitution settlement extension.
What would occur if groups finally rejected in giant numbers a closing NASCAR proposal? They requested themselves that as early in June 2022 as a result of it was attainable, as referenced by Prime, that groups and drivers may race in SRX.
This was particularly a priority as NASCAR started to really feel as if SRX began to infringe on its id. For instance, SRX began out in 2021 as a sequence that ran on three dust tracks and three paved quick tracks utilizing a roster of retired legends and a neighborhood hero from every venue.
By the second 12 months, races began to extra continuously characteristic Cup Collection drivers and the ultimate 12 months in 2023 noticed Brad Keselowski run all the season with cameo appearances from the likes of Kyle Busch and Chase Briscoe. Chase Elliott appeared in races.
“I recall all of us grew to become involved with the look and the texture of the sequence, sure,” O’Donnell stated whereas underneath questioning from Kessler.
Nonetheless, O’Donnell identified that 2016-2024 constitution settlement didn’t stop drivers from collaborating within the sequence. However of concern to O’Donnell and his friends is that staff homeowners like Hamlin and Justin Marks additionally made begins.
The sequence was additionally co-founded by a constitution holding staff proprietor, on the time, in three-time Cup Collection champion Tony Stewart, which led to O’Donnell having a dialog with then Stewart-Haas Racing president Brett Frood that assuaged his considerations, however solely quickly.
“I realized from Brett Frood that the unique plan was to not seem like NASCAR, characteristic NASCAR drivers,” O’Donnell stated, “however these are all issues that ended up occurring.”
How did NASCAR reply to that menace? Think about this June 29, 2022 found dialog between Prime, Phelps, Ben Kennedy and O’Donnell.
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O’Donnell: Justin marks is racing srx?
Ben Kennedy: Noticed that too. Disappointing.
Prime: They simply don’t get it. I’m positive its cool for Justin to go get behind the wheel however there’s no regard for the larger image. And perhaps that’s on us for not giving them that incentive, I don’t know. However you’ve bought Marks, Chase (Elliott), Tony (Stewart) and (Ryan) Blaney racing on a community that competes towards our rights holders. They outrated (on tv) Xfinity and Vans final weekend; it isn’t some native dust monitor stuff.
O’Donnell: Truly you will have one of many voices of FOX in Waltrip, an proprietor of Cup vehicles in Stewart, our hottest driver for years and certainly one of our champs fathers and so on. That is exhibit ‘a’ that no one offers a shit about what bought them their careers. Pay em some cash and they’re all in. The man who cried about security each single day is in a field automobile with out SAFER Boundaries and never a care on the earth. And by the way in which, who does Curtis (Polk, 23XI co-owner) have hanging with (Michael Jordan) over the weekend in Nashville? Not Ben, not me or (Scott) Prime or anybody – Marty Smith from ESPN. Coincidence? Tons to get our arms round however sadly any ‘goodwill’ appears to be misplaced. So smiles throughout however behind the scenes we scheme and we win.” Wait till (Dale) Jr. says he’s operating an occasion. Matter of time. They’ll go to North Wilkesboro with Jr. if we’re not cautious. We must be the primary again.
Prime: Agreed – North Wilkesboro and Bowman Grey subsequent 12 months with Jr and mates if we don’t make strikes
O’Donnell: How about this for All Star – make it a combo – Bowman and Wilkes Fri/Solar
Prime: Sick! And flip it for 2024. We’ve bought strikes to make. Simply have to promote them by. Needs to be a superb working session Thursday
Phelps: That’s the important thing – we have to have everybody perceive that this might flip into LIV if we don’t play our playing cards proper. We’re smarter than they’re – however a part of the problem is that they don’t have the information and don’t appear to need to take the time to study or perhaps they simply don’t care. It’s all in regards to the cash and feeling like they’ve been heard and are revered. The SRX factor is simply baffling to me. Why don’t they get it? Oh, they do get it, and it’s an enormous FU to us.
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This was an instance of their concern, and NASCAR ended up including each Wilkesboro (2023) and Bowman Grey (2025) to the Cup Collection schedule within the years that adopted.
Speedway Motorsports, which owns quite a few tracks and dates on the Cup Collection schedule, wished so as to add an SRX date in 2024 for debt servicing functions however was blocked by NASCAR, which has tracks signal an exclusion provision. NASCAR didn’t permit SM to schedule that race.
O’Donnell was requested why in his testimony by Kessler.
O’Donnell stated NASCAR was within the center negotiating a brand new broadcast rights settlement ‘and SRX began to seem like NASCAR, so we stated no.’ He added that ‘we (NASCAR) wished to achieve as a lot TV income for the groups and tracks as attainable.’
Which means: NASCAR felt just like the existence of SRX, and an more and more viable SRX on a significant tv platform, was a possible hurdle to NASCAR’s negotiations, to say nothing of what O’Donnell thought created confusion within the market.
He stated he felt like, given the state of TV negotiations, that everybody within the sport ought to have been, and wished to be, all-in on NASCAR.
Then there’s this February 1, 2023 textual content alternate between Phelps and O’Donnell.
Phelps: Oh nice, one other proprietor racing in SRX
O’Donnell: That is NASCAR. Pure and easy. Sufficient. We’d like authorized to take a shot at this.
Phelps: These guys are simply plain silly. Must put a knife on this trash sequence.
Why did O’Donnell need authorized to have a look at it, requested Kessler?
“I believed it seemed increasingly more like NASCAR.”
Is it as a result of he wished SRX stopped?
“I simply wished authorized to check out it.”
As for Wilkesboro and Bowman Grey being added to the Cup schedule, Kessler prompt this as anti-competitive habits and O’Donnell stated the promotional household at BGS, and the Frances, goes again generations.
That is true.
O’Donnell stated that household wished to promote their lease, and with NASCAR’s roots going again to the 50s there, and nonetheless sanctioning the weekly monitor program, the league was all of the extra welcome to choose up the lease. He stated Speedway got here to NASCAR wanting a Cup race at Wilkesboro, as they personal it, and that request was merely granted.
Kessler hammered the purpose dwelling yet one more time, earlier than shifting on, that these strikes all got here after these textual content exchanges particularly citing taking Cup to those tracks in response to the specter of the SRX sequence.
SRX’s 2024 season by no means materialized because it introduced its closure in January 2024 for causes that also haven’t been made clear.
O’Donnell conceded in his testimony that ‘he thinks about it every single day’ about the opportunity of a breakaway sequence and it’s in his job description to evaluate the panorama for adversarial headwinds to the NASCAR enterprise.
He and his fellow senior management friends expressed concern in an e mail chain after a gathering with the groups over constitution negotiations in March 2022 that the groups may kind or be part of a competitor sequence.
So, monitor agreements, with O’Donnell’s oversight, obtained extra intensive non-compete clauses that prolonged two years plus one other two years. O’Donnell says the second two-years solely kicked in with settlement to phrases after the primary two years, regardless of what the found emails stated, and that the prolonged agreements was merely about scheduling functions.
However what does the non-compete apply to, on condition that it was carried out towards SRX racing at a SMI facility?
“If it seemed prefer it infringed upon our IP,” O’Donnell stated.
Regardless, O’Donnell and Prime had been so involved that the groups may kind their very own sequence or companion with SRX and Speedway Motorsports and run two races at each SMI facility plus one at Eldora Speedway, owned by Stewart, and the Indianapolis Motor Speedway owned by fellow Cup Collection staff proprietor Roger Penske.
O’Donnell stated he wished monitor agreements finalized with Speedway Motorsports by that Saturday earlier than the groups may discover that choice.
Prime and O’Donnell additionally felt just like the staff homeowners may promote their charters to F1 proudly owning Liberty Media and/or run this mid-week fashion sequence.
It doesn’t matter what, LIV Golf and the way it challenged the hegemony of the PGA Tour, created a level of nervousness inside NASCAR circles.
O’Donnell is professional staff
Nascar President, Steve O’Donnell
Photograph by: Jared C. Tilton / Getty Photos
O’Donnell took notes throughout a gathering with staff homeowners in 2022, the primary time during which the 2 sides mentioned the constitution negotiations forward of them, the place the chief was informed that the present mannequin was ‘damaged’ for the opponents.
He famous, actually, that groups may very well be one misplaced sponsors away from going out of enterprise.
His notes learn ‘the enterprise mannequin is damaged for the groups,’ after being proven a compositive monetary report that confirmed vehicles costing $20 million per entry per season, and O’Donnell taking that at face worth.
“We knew the trade was challenged,” O’Donnell stated when requested about his takeaways.
On the time, the constitution settlement paid 65 p.c of broadcast rights income to tracks, 25 p.c to groups and 10 p.c to the Sanctioning Physique itself.
In that assembly, 23XI investor and eventual Groups Negotiating Committee chairman Curtis Polk informed the NASCAR management staff that the groups had three major targets – maximize broadcast rights income, improve competitors and introduce a spending wage cap.
Throughout that assembly, Jeff Gordon of Hendrick Motorsports requested Ben Kennedy, the good grandson of NASCAR founder Invoice France and nephew to Jim, if ‘the household was open to a brand new monetary mannequin’ to assist the groups.
On the time, Kennedy stated sure.
Kessler requested O’Donnell on Thursday if that was truly true.
“No.”
By February 14, 2023, O’Donnell stated in a textual content message thread that he hoped the longer term management would skew youthful.
“I hoped the longer term board would come with the following technology and hoped to see that change,” O’Donnell typed.
Jim France is 81.
O’Donnell stated that the ‘legacy mindset’ within the NASCAR Board ‘inhibited progress.’
However by all of it, O’Donnell did attempt his greatest, even in dialog with the elder France to make headway for the groups, however 21 of the 22 Amanda Chart points remained both impartial or NASCAR wins.
“Mr. France was the brick wall within the negotiations,” Kessler prompt to O’Donnell referring to a textual content message line from Prime.
And the response?
“These are your phrases, not mine.”
O’Donnell has been at NASCAR since 1996. And whereas he’s very passionate, typically to the purpose of acrimony, Kessler didn’t get an emotional response out of the longtime govt who as an alternative caught to his broader factors about attempting to assist the groups and NASCAR management all discover a diploma of commonality.
“My job every single day is to develop the game.”
He continuously spoke to the ‘stakeholders’ and stated that progress applies to his bosses, but in addition the groups and the followers. And if which means making his bosses mad at him?
“The Frances have at all times informed me that they don’t rent ‘Sure Folks’ and that typically his job is to talk as much as the broader points throughout the storage.
And whereas a lot of this case has been in regards to the groups’ monetary struggles, the premise for his or her arguments for extra money within the constitution negotiations, O’Donnell illustrated on Thursday that NASCAR continuously invests into the game at nice loss too.
For instance, the three years spent racing in Downtown Chicago price NASCAR $55 million, in keeping with O’Donnell.
Why did NASCAR do it?
“It was a strategic funding as a result of if not for that, Amazon wouldn’t have develop into a broadcast companion,” stated O’Donnell.
NASCAR stated it misplaced $6 million racing in Mexico Metropolis this 12 months however did so as a result of it was vital to Amazon, who kicked in an addition $1 million in race purse.
For what it’s price, Kessler may solely do math to search out $500,000 of that loss and O’Donnell couldn’t clarify the remainder of the $5+ million past ‘logistics.’
Jenkins cross-examined
The morning on Thursday opened with the remainder of Entrance Row Motorsports proprietor Bob Jenkins cross-examination and re-examination.
NASCAR spent Wednesday night and Thursday morning making an attempt to color an image, over the previous two days that Jenkins has used his different companies to misrepresent FRM’s financials.
Jenkins has testified that it prices $20 million per automobile to race within the Cup Collection, however NASCAR legal professional Lawrence Buterman produced discovery paperwork that confirmed probably the most Entrance Row has ever spent on a Cup automobile is $14 million.
Jenkins stated the $20 million is the mixture of a number of groups as utilized in a groups’ doc.
“The median price is $20 million; the actual fact I can do it for much less helps me cut back my prices,” Jenkins informed Buterman.
Buterman pointed to paperwork that confirmed a part of what Entrance Row is asking for in damages matches a $1.2 million loss from his Truck Collection staff, which is unrelated to the lawsuit and the Cup Collection constitution system.
Jenkins conceded that Truck Collection losses shouldn’t have been included.
One other level of the lawsuit is 23XI and Entrance Row suggesting that NASCAR’s characterised ‘take it or depart it’ closing constitution supply to the groups on September 6, 2004 was the habits of a monopsonist performing anti-competitively.
That day, NASCAR despatched the constitution doc to groups and informed them that they had by the tip of the enterprise day to signal it or lose their charters.
Buterman admitted proof that Jenkins deployed the identical strategy in 2021 with 23XI Racing co-owner and co-plaintiff Denny Hamlin over a proposed merger between their two groups.
Within the textual content, Jenkins informed Hamlin ‘we are able to’t maintain negotiating this endlessly,” Jenkins wrote in a textual content and that’s “…why we determined we needed to have a deal by 5 p.m.”
Just like Buterman attempting to attract parallels to Hamlin and Jenkins having exclusivity clauses constructed into their contracts with drivers, regardless of drivers having choices of the place to drive, as just like the monitor exclusivity clauses and constitution goodwill provisions, Jenkins fended this off with a authorized response too.
“That is one other certainly one of your analogies that doesn’t work,” Jenkins stated, since Hamlin may additionally purchase a constitution from Starcom or Rick Ware Racing, which had been in the marketplace on the time.
Jenkins had a textual content message with President Jerry Freeze that stated ‘inform Rick Ware he can cost no matter to Hamlin’ for a constitution. Jenkins stated that wasn’t him imposing a time period on RWR and that he didn’t share privy monetary details about the proposed 23XI, FRM merger.
That merger by no means occurred, Jenkins stated, as a result of Toyota may solely subject one engine program and never two and the deal was for Jenkins’ two charters.
“I could not run one Ford and one Toyota,” and the deadline he gave Hamlin was as a result of Ford and Roush wanted to know if Jenkins was leaving for TRD and Hamlin or not.
Pace it up
Charles R. Jonas
The day ended with Decide Kenneth D. Bell criticizing the tempo of the trial up to now with simply three witnesses in as many days.
“I get the impression that this isn’t shifting alongside the way in which all of us would really like it to.”
Decide Bell stated he was hesitant to introduce a chess clock to power each side on a timer however says he desires future witnesses to reply ‘probably the most innocent of questions’ a bit of faster with much less dodging.
“There are uncomfortable texts and emails for each side, so simply acknowledge it as a foul look and get on with it,” Bell stated.
Bell says the jury is being subjected to redundancy ‘and so they’re seeing a number of timber and never a number of forest.’
NASCAR had meant to name Roger Penske as a witness however is just accessible on Monday. Chris Yates, the lead legal professional for NASCAR’s defensive, requested that Penske be allowed to testify on Monday even when out of order. Kessler objected as a result of it might disrupt the story and order he deliberately is attempting to current to the jury.
Bell agreed with Kessler and NASCAR was informed to have Penske accessible when his time comes as a result of ‘federal trials are an inconvenience.’
The jury was informed this may be a two week trial, however now it’s trying to prolong into the third-week, and Bell stated the inconvenience on the jury could be unacceptable to extend that dedication by 50 p.c.
“I’d have a full blown riot,” Bell stated of his jury, approaching the vacations.
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