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 collection will play a task in figuring out within the consequence 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 lawyer Jeffrey Kessler has began to color an image that the Sanctioning Physique’s management turned more and more conscious of a possible competitor collection and reacted to it in tangible manner.
That is essential as a result of this case, as determined by a jury, will reply partially if NASCAR is utilizing its place as a monopoly within the premier Inventory Automobile racing area to hurt competitors or these working within the area, just like the groups.
So the truth that Famous person Racing Sequence retains arising within the line of questioning is extra sign than noise.
NASCAR began to point out concern about SRX in the course of the summer time of 2022, in the course of the second season of the midweek brief observe collection, because it negotiated with groups over the phrases of the constitution settlement extension.
What would occur if groups finally rejected in massive numbers a last 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 collection that ran on three grime tracks and three paved brief tracks utilizing a roster of retired legends and a neighborhood hero from every venue.
By the second yr, races began to extra regularly function Cup Sequence drivers and the ultimate yr in 2023 noticed Brad Keselowski run your complete season with cameo appearances from the likes of Kyle Busch and Chase Briscoe. Chase Elliott appeared in races.
“I recall all of us turned involved with the look and the texture of the collection, sure,” O’Donnell stated whereas below questioning from Kessler.
Nonetheless, O’Donnell identified that 2016-2024 constitution settlement didn’t stop drivers from collaborating within the collection. However of concern to O’Donnell and his friends is that group homeowners like Hamlin and Justin Marks additionally made begins.
The collection was additionally co-founded by a constitution holding group proprietor, on the time, in three-time Cup Sequence 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 briefly.
“I discovered from Brett Frood that the unique plan was to not appear like NASCAR, function NASCAR drivers,” O’Donnell stated, “however these are all issues that ended up taking place.”
How did NASCAR reply to that risk? Contemplate 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 possibly that’s on us for not giving them that incentive, I don’t know. However you’ve obtained Marks, Chase (Elliott), Tony (Stewart) and (Ryan) Blaney racing on a community that competes towards our rights holders. They outrated (on tv) Xfinity and Vehicles final weekend; it isn’t some native grime observe stuff.
O’Donnell: Really you’ve one of many voices of FOX in Waltrip, an proprietor of Cup automobiles in Stewart, our hottest driver for years and one among our champs fathers and so on. That is exhibit ‘a’ that no person provides a shit about what obtained 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 automotive with out SAFER Limitations 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 working an occasion. Matter of time. They’ll go to North Wilkesboro with Jr. if we’re not cautious. We should be the primary again.
Prime: Agreed – North Wilkesboro and Bowman Grey subsequent yr with Jr and buddies 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 obtained 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 difficulty is that they don’t have the information and don’t appear to need to take the time to study or possibly 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 Sequence schedule within the years that adopted.
Speedway Motorsports, which owns quite a few tracks and dates on the Cup Sequence schedule, needed 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 appear like NASCAR, so we stated no.’ He added that ‘we (NASCAR) needed to realize 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 serious 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 needed 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 want authorized to take a shot at this.
Phelps: These guys are simply plain silly. Must put a knife on this trash collection.
Why did O’Donnell need authorized to take a look at it, requested Kessler?
“I believed it appeared an increasing number of like NASCAR.”
Is it as a result of he needed SRX stopped?
“I simply needed authorized to check out it.”
As for Wilkesboro and Bowman Grey being added to the Cup schedule, Kessler advised 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 needed to promote their lease, and with NASCAR’s roots going again to the 50s there, and nonetheless sanctioning the weekly observe program, the league was all of the extra welcome to select 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 residence another time, earlier than transferring 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 collection.
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 day by day’ about the potential of a breakaway collection and it’s in his job description to evaluate the panorama for opposed headwinds to the NASCAR enterprise.
He and his fellow senior management friends expressed concern in an electronic mail chain after a gathering with the groups over constitution negotiations in March 2022 that the groups may type or be part of a competitor collection.
So, observe agreements, with O’Donnell’s oversight, obtained extra in depth 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 applied towards SRX racing at a SMI facility?
“If it appeared prefer it infringed upon our IP,” O’Donnell stated.
Regardless, O’Donnell and Prime had been so involved that the groups may type their very own collection 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 Sequence group proprietor Roger Penske.
O’Donnell stated he needed observe agreements finalized with Speedway Motorsports by that Saturday earlier than the groups may discover that possibility.
Prime and O’Donnell additionally felt just like the group homeowners may promote their charters to F1 proudly owning Liberty Media and/or run this mid-week fashion collection.
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 group
Nascar President, Steve O’Donnell
Photograph by: Jared C. Tilton / Getty Photos
O’Donnell took notes throughout a gathering with group homeowners in 2022, the primary time by 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 could possibly 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 automobiles 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 % of broadcast rights income to tracks, 25 % to groups and 10 % to the Sanctioning Physique itself.
In that assembly, 23XI investor and eventual Groups Negotiating Committee chairman Curtis Polk informed the NASCAR management group that the groups had three major objectives – maximize broadcast rights income, enhance 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 really true.
“No.”
By February 14, 2023, O’Donnell stated in a textual content message thread that he hoped the long run management would skew youthful.
“I hoped the long run board would come with the subsequent era 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 development.’
However by all of it, O’Donnell did attempt his finest, 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 advised 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 government who as a substitute caught to his broader factors about making an attempt to assist the groups and NASCAR management all discover a diploma of commonality.
“My job day by day is to develop the game.”
He regularly spoke to the ‘stakeholders’ and stated that development applies to his bosses, but additionally the groups and the followers. And if meaning 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 inside 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 regularly invests into the game at nice loss too.
For instance, the three years spent racing in Downtown Chicago value NASCAR $55 million, based on 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 yr however did so as a result of it was essential to Amazon, who kicked in an addition $1 million in race purse.
For what it’s value, 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 trying 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 automotive to race within the Cup Sequence, however NASCAR lawyer Lawrence Buterman produced discovery paperwork that confirmed probably the most Entrance Row has ever spent on a Cup automotive is $14 million.
Jenkins stated the $20 million is the mixture of a number of groups as utilized in a groups’ doc.
“The median value is $20 million; the very fact I can do it for much less helps me scale 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 Sequence group, which is unrelated to the lawsuit and the Cup Sequence constitution system.
Jenkins conceded that Truck Sequence 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 go away it’ last constitution supply to the groups on September 6, 2004 was the habits of a monopsonist appearing anti-competitively.
That day, NASCAR despatched the constitution doc to groups and informed them they’d by the top of the enterprise day to signal it or lose their charters.
Buterman admitted proof that Jenkins deployed the identical method 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 hold negotiating this eternally,” Jenkins wrote in a textual content and that’s “…why we determined we needed to have a deal by 5 p.m.”
Much like Buterman making an attempt 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 much like the observe exclusivity clauses and constitution goodwill provisions, Jenkins fended this off with a authorized response too.
“That is one other one among your analogies that doesn’t work,” Jenkins stated, since Hamlin may additionally purchase a constitution from Starcom or Rick Ware Racing, which had been available on the market 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.
Velocity it up
Charles R. Jonas
The day ended with Decide Kenneth D. Bell criticizing the tempo of the trial so far with simply three witnesses in as many days.
“I get the impression that this isn’t transferring 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 either 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 either side, so simply acknowledge it as a nasty look and get on with it,” Bell stated.
Bell says the jury is being subjected to redundancy ‘and so they’re seeing loads of timber and never loads of forest.’
NASCAR had meant to name Roger Penske as a witness however is simply out there on Monday. Chris Yates, the lead lawyer 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 could disrupt the story and order he deliberately is making an attempt to current to the jury.
Bell agreed with Kessler and NASCAR was informed to have Penske out there when his time comes as a result of ‘federal trials are an inconvenience.’
The jury was informed this is able to be a two week trial, however now it’s trying to prolong into the third-week, and Bell stated the inconvenience on the jury can be unacceptable to extend that dedication by 50 %.
“I might have a full blown riot,” Bell stated of his jury, approaching the vacations.
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