In a timeline the place the events concerned within the 23XI Racing and Entrance Row Motorsports v NASCAR trial couldn’t agree on something to the purpose they’ve ended up in court docket, it’s no shock that they may have a look at the identical monetary data and find yourself with two totally different interpretations.
That’s the key takeaway from a lot of Wednesday, which is formally Day 8, of the trial that can decide if NASCAR used its monopsony standing to financially drawback groups that compete within the Cup Sequence and hurt competitors on the entire.
As a reminder, this case is not about whether or not or not NASCAR is a monopoly, which by itself will not be unlawful. As a substitute, the Western District of North Carolina has already decided that NASCAR is a monopsony, the one purchaser of the product that’s premier Inventory Automotive racing groups.
The jury should decide if NASCAR used that market energy to hurt competitors and the earnings of groups by the constitution system.
NASCAR Chief Monetary Officer Greg Motto was on the witness stand for simply in need of two hours the place he spent more often than not discussing the $400 million in distribution to the France household belief.
First, perceive that for tax functions, NASCAR is structured as a personal S Company which means that its earnings, losses, deductions and credit are handed to the shareholders. The shareholders, on this case, are all France-Kennedy relations.
Jeffrey Kessler, the lead legal professional for 23XI and FRM, made the argument that NASCAR may have afforded $720 million a 12 months in constitution funds to the groups as a substitute of the $431 million distributed in 2025. Motto, along with a monetary knowledgeable (Mark Zmijewski) stated that may have bankrupted NASCAR, in distinction to arguments made by group monetary knowledgeable Dr. Edward Snyder.
Kessler has made an analogous argument from the beginning of the trial that every one the testimony from NASCAR executives and their consultants’ math embody everybody retaining the identical wage and the enterprise being run precisely because it was final 12 months.
As a substitute, Kessler has repeatedly pointed to what occurred in 2020 when COVID-19 compelled NASCAR to situation wage cuts for everybody from the highest to the underside till the pandemic subsided.
Kessler stated in a world wherein the groups had been paid what they felt they had been entitled to if not for anticompetitive conduct, Jim France down to trace upkeep would have additionally skilled related shifts of their compensation.
Kessler stated that NASCAR promoting a majority of the land that when housed Auto Membership Speedway for $544 million may have gone to paying the groups as a substitute of paying down debt from the Worldwide Speedway Company merger in 2019. He additionally stated that, as an S-Corp, NASCAR isn’t required to ship dividend funds to the France household.
Motto says NASCAR has to pay its taxes, and meaning the France household, for the reason that firm is an S-Corp. Kessler says promoting a NASCAR owned monitor meant that its general fairness was improved because it now has much less debt.
Kessler stated NASCAR and the France household belief is simply transferring cash from one palm of the household hand to a different.
“You do no matter you’ll be able to to attenuate the taxes to the France household,” Kessler stated to Motto beneath cross-examination.
Motto says NASCAR’s 12 months over 12 months income loss in 2025 was $10 million, which Kessler says was merely a ‘rounding error’ for an entity that dimension.
Kessler additionally cross-examined Zmijewski, who prefers to go by Professor Z, and stated that the NASCAR monetary knowledgeable didn’t correctly account for the Sanctioning Physique’s monetary data within the ‘however for world’ wherein groups had been more healthy as a result of they weren’t topic to anticompetitive hurt.
Once more, each side used the identical monetary data to achieve two totally different conclusions all through the day.
NASCAR begins protection
The primary seven and a half days of the trial featured 23XI and Entrance Row’s legal professionals calling their witnesses, with NASCAR cross-examining them, after which passing the witness again for a re-examination.
Beginning on Wednesday afternoon, the reverse course of occurred with NASCAR constructing its case by its chosen witnesses, which get passes back-and-forth by the identical course of.
The primary witness known as was John Probst, senior vp of innovation and racing growth for NASCAR, who spoke principally to the event of the NextGen automotive and the argument that groups having a ‘reckless’ spending downside as beforehand articulated.
Probst began working for Ford Motor Firm out of faculty within the Mid-90s, which led him to competing within the CART Indy Automotive Sequence, after which NASCAR with Pink Bull Racing and Chip Ganassi Racing, earlier than transferring to the Sanctioning Physique in 2016.
NASCAR needed to make use of Probst for instance what occurred with the American Open Wheel Break up, as a cause to not have a competing collection, however these questions had been objected to by Choose Kenneth D. Bell and sustained.
In different phrases, the questions weren’t allowed to be answered.
“We’re getting a bit of bit out in left area,” Bell advised the protection.
Probst was allowed to supply a short summation of what occurred between CART and the Indy Racing League over the 90s.
“(IRL) began racing on the Indianapolis 500, created their very own racing collection, began their very own groups to fill the grid, labored with the OEMs to begin extra groups and break up the collection aside.”
Probst was used as a conduit to clarify to the jury what a wind tunnel is, discussing the Laurel Hill Tunnel beneath a mountain owned by Ganassi, for instance simply how a lot cash groups spend to make use of such amenities.
Hundreds of {dollars} an hour
Kessler objected to Probst happening for practically 10 minutes in regards to the historical past of wind tunnel testing and Choose Bell requested to maneuver the dialog alongside.
“That is all very attention-grabbing and we perceive your level however let’s transfer on,” Bell advised the NASCAR aspect of the room.
Probst defined to the jury that the event of the NextGen automotive, a single-source components equipped spec automotive, was created across the philosophical concept that followers solely care about producer particular engines and our bodies.
Every part else, Probst argued, couldn’t be seen by followers and largely weren’t vital to them. This may permit groups to spend significantly much less cash spending time in wind tunnels and engineering their very own components and items.
Probst stated the idea of the automotive was endorsed by 30 of the 36 constitution holders earlier than growth formally started on its growth. It’s a growth, that Probst factors out, has price NASCAR $14 million and the groups nothing since they now not R&D the automotive.
‘I believed that was a reasonably compelling endorsement by the group proprietor council,’ Probst stated.
Probst testified that NASCAR is aware of how usually groups buy components from the accepted distributors they usually ask for that information a couple of times a 12 months. They’re allowed to beneath the constitution settlement. They ask for this information as a result of they need to flip round and present groups that purchasing extra components would not correlate to wins.
He cited that Group Penske routinely wins probably the most races on the fewest re-purchasing of single supply equipped components. 23XI Racing has spent probably the most over the previous two years.
Probst defined to the jury that whereas some groups (like Entrance Row Motorsports in keeping with the testimony of proprietor Bob Jenkins final week) resent not being allowed to restore components as a result of buying new ones repeatedly price extra, NASCAR would not permit it as a result of ‘restore’ to groups means ‘modify’ and ‘enhance.’
Permitting groups to restore components, Probst testified, would open up a spending struggle between groups and up-end the parity that was all the level of the seventh-generation platform.
Beneath cross-examination by Kessler, Probst was advised ‘you’re conscious that my shoppers aren’t difficult the NextGen, proper’ however as a substitute sued NASCAR based mostly on the non-compete restrictions positioned within the constitution settlement.
Kessler requested Probst if he is aware of of any research that may assist stopping groups from utilizing Cup Sequence vehicles in different leagues as ‘pro-competitive’ they usually argued back-and-forth over legalese and the readability of the query.
Earlier than creating the NextGen automotive, Probst wrote in found emails that NASCAR had explored taking the earlier automotive, the Gen6 and choosing components and items of that platform and making that spec as a substitute.
Why select creating a brand new automotive over that?
Probst wrote in an e-mail that the Gen6*, which is what the modified model of the previous automotive would have been known as, would ‘enhance the chance to NASCAR of a copycat collection.’
Kessler requested what NASCAR was afraid of.
“We do not concern competitors,” Probst responded.
Kessler then identified that NASCAR including exclusivity clauses got here in fast aftermath to the RTA creating a mid-week summer time filth collection and the arrival of the SRX collection.
NASCAR’s authorized group objected to the assertion however Choose Bell allowed it.
Probst stated monitor sanctioning agreements weren’t his division and couldn’t communicate to the exclusivity agreements. As well as, he stated that NASCAR’s place of defending its model is frequent enterprise and in contrast the Sanctioning Physique to Coca-Cola.
He stated Coke wouldn’t develop a brand new recipe after which instantly permit Pepsi to repeat it. Probst additionally stated that no group ever requested NASCAR to make use of the Gen6 automotive in a non-NASCAR division nor the NextGen.
“All they should do is ask,” Probst stated.
Kessler responded by saying there isn’t a method that NASCAR would permit groups to make use of the NextGen in a non NASCAR collection.
“We’d talk about it,” Probst unhappy again.
Kessler then requested why NASCAR Commissioner Steve Phelps steered that ‘somebody must put a knife’ within the ‘trash’ SRX collection.
“I would assume Steve would reply that query,” Probst stated.
Kessler introduced Probst an inside doc wherein NASCAR executives together with Probst, Phelps, Steve O’Donnell and Scott Prime had been tasked with discovering how a lot it could price to begin a Cup Sequence group from scratch.
Probst stated groups mislead or don’t reply price questions precisely or evenly so NASCAR merely needed to have a greater concept of what the precise prices related to competitors had been.
Kessler suggests it was an train to higher inform ‘Mission Gold Codes,’ NASCAR’s choice to take the Cup Sequence ‘vertical’ and run a collection in-house if each group refused to signal the 2025 constitution extension.
Probst says their causes to conduct the train had been altruistic and at face-value.
Probst, when requested about, says he didn’t solely creator the Gold Codes doc however contributed to it. He additionally conceded that he used information from the aforementioned examine in his contributions to the Gold Codes slide presentation.
Lastly, Kessler requested Probst a few textual content message dialog between he and his chief of workers, Tom Swindell the morning after NASCAR’s constitution extension deadline on September 6, 2024.
Swindell stated ‘RIP Mission Gold Codes,’ in a message to Probst, who replied ‘YES.’ Swindell stated this was ‘nice information’ and requested ‘what’s the leverage for (23XI, FRM in) holding out?’ Probst stated ‘I can not see any.’
Kessler was attempting for instance that Mission Gold Codes was greater than only a contingency plan however a really actual consideration. Probst stated he and Swindell are private pals they usually textual content about their pals, hobbies, households and work.
“No additional questions, your honor,” Kessler stated upon ending cross-examination.
France finally ends up
After a Tuesday session the place he was largely evasive, providing over a dozen ‘I have no idea’ or ‘I don’t remembers,’ France did reply a direct query over why he was not in favor of everlasting charters for Cup Sequence group homeowners.
“I don’t have a sightline to the longer term, and I don’t really feel comfy making a promise I don’t know if I can preserve,” France stated.
On Tuesday, France was proven letters despatched to him by pals Roger Penske, Rick Hendrick, Joe Gibbs and Jack Roush urging the NASCAR CEO to make their possession statuses ‘evergreen,’ which might develop the fairness of what would then be a franchise, whereas costing the Sanctioning Physique nothing.
“I don’t know how one can set something on this altering world we’re in as everlasting,” France stated. “I’m simply not comfy making agreements that go on ceaselessly.”
France stated NASCAR budged on quite a few factors, one thing an inside (Amanda Chart) graph disagrees with because it confirmed 21 wins or neutrals for NASCAR and one win for group, however France was not going to make charters everlasting.
What kind of certainty would he want?
“Don’t know ’til we get there,” France stated.
Unfastened ends
Earlier than dismissing the jury, Choose Bell advised them that they are going to be wanted subsequent week however that NASCAR has expressed to the court docket its intent to conclude its case by 5:30 on Friday. The unique schedule was a 10-day trial over two weeks.
A sluggish begin compelled Bell to increase every day to an additional hour this week, and shutting arguments will come no earlier than Monday morning now.
There was additionally the matter of the place NASCAR’s legal professional obtained the data that Richard Childress explored promoting a portion of his Cup Sequence group to a gaggle spearheaded by former driver Bobby Hillin Jr.
This was protected by a non-disclosure settlement and Childress was visibly agitated when NASCAR’s legal professional used it on him throughout cross-examination on Tuesday.
Additionally after the jury was dismissed on Wednesday, groups legal professional Danielle Williams says she had six questions on the matter. Choose did not need to hear them. Williams says NASCAR hasn’t even given their aspect the paperwork but.
They need to know who NASCAR’s supply was who broke an NDA.
Bell stated each events wanted to work collectively to get an answer earlier than Thursday morning or he was going to situation an order ‘and I’ve an concept of what that’s going to be.’
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