SRX Emerges as Key Factor in NASCAR Antitrust Lawsuit as Teams Challenge Sanctioning Body's Dominance

The antitrust trial involving 23XI Racing and Front Row Motorsports against NASCAR has unexpectedly placed the now-defunct Superstar Racing Experience (SRX) series at the forefront, becoming a pivotal element in the jury’s potential determination of the case. Over four days of proceedings, attorneys for the plaintiffs have meticulously presented evidence suggesting that NASCAR’s leadership perceived SRX as a genuine competitive threat and subsequently enacted measures in response.

At the heart of this legal battle is the question of whether NASCAR has leveraged its dominant position in premier stock car racing to stifle competition and disadvantage teams operating within the sport. The repeated emergence of SRX in the courtroom, as highlighted by plaintiff attorney Jeffrey Kessler during his questioning of NASCAR executives Steve O’Donnell (President) and Scott Prime (EVP-Strategy), signals its significance beyond mere incidental discussion.

The timeline of NASCAR’s alleged concerns regarding SRX began to crystallize during the summer of 2022, coinciding with the second season of the midweek short-track series. This period was also marked by crucial negotiations between NASCAR and its teams concerning the extension of the charter agreement, a foundational document governing team participation and revenue sharing.

Internal discussions within NASCAR, as revealed through discovered communications, indicate a growing apprehension about the possibility of teams rejecting NASCAR’s final charter proposal. This concern was particularly acute given the potential for teams and drivers to seek opportunities in alternative racing series, such as SRX. As early as June 2022, NASCAR executives, including Prime, acknowledged this scenario.

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The perceived threat intensified as NASCAR began to feel that SRX was encroaching upon its established identity and market. Initially conceived in 2021 as a series featuring retired racing legends on a mix of dirt and paved short tracks, with a "local hero" competitor at each event, SRX evolved. By its second season, the series increasingly incorporated active Cup Series drivers. The final year of competition in 2023 saw notable participation from prominent NASCAR figures, including Brad Keselowski competing full-time, and cameo appearances from drivers like Kyle Busch, Chase Briscoe, and Chase Elliott.

"I recall we all became concerned with the look and the feel of the series, yes," O’Donnell stated under oath, acknowledging the apprehension within NASCAR’s leadership. While O’Donnell pointed out that the 2016-2024 charter agreement did not explicitly prohibit drivers from participating in SRX, a key point of contention arose with the involvement of team owners themselves, such as Denny Hamlin and Justin Marks, who also took turns behind the wheel.

The founding of SRX by Tony Stewart, a then-charter-holding team owner, further fueled NASCAR’s unease. O’Donnell recounted a conversation with Brett Frood, then-president of Stewart-Haas Racing, which temporarily alleviated his concerns. "I learned from Brett Frood that the original plan was to not look like NASCAR, feature NASCAR drivers," O’Donnell testified, adding, "but these are all things that ended up happening."

The unearthed communications from June 29, 2022, between Prime, NASCAR executives Ben Kennedy and O’Donnell, and potentially others, provide a window into NASCAR’s strategic thinking and reaction to the SRX situation:

O’Donnell: "Justin Marks is racing SRX?"
Ben Kennedy: "Saw that too. Disappointing."
Prime: "They just don’t get it. I’m sure its cool for Justin to go get behind the wheel but there’s no regard for the bigger picture. And maybe that’s on us for not giving them that incentive, I don’t know. But you’ve got Marks, Chase (Elliott), Tony (Stewart) and (Ryan) Blaney racing on a network that competes against our rights holders. They outrated (on television) Xfinity and Trucks last weekend; it isn’t some local dirt track stuff."
O’Donnell: "Actually you have one of the voices of FOX in Waltrip, an owner of Cup cars in Stewart, our most popular driver for years and one of our champs fathers etc. This is exhibit ‘a’ that nobody gives a shit about what got them their careers. Pay em some money and they are all in. The guy who cried about safety every single day is in a box car without SAFER Barriers and not a care in the world. And by the way, 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 anyone – Marty Smith from ESPN. Coincidence? Lots to get our arms around but sadly any ‘goodwill’ seems to be lost. So smiles all around but behind the scenes we scheme and we win. Wait until (Dale) Jr. says he is running an event. Matter of time. They will go to North Wilkesboro with Jr. if we are not careful. We need to be the first back."
Prime: "Agreed – North Wilkesboro and Bowman Gray next year with Jr and friends if we don’t make moves."
O’Donnell: "How about this for All Star – make it a combo – Bowman and Wilkes Fri/Sun."
Prime: "Sick! And flip it for 2024. We’ve got moves to make. Just need to sell them through. Should be a good working session Thursday."
Phelps: "That’s the key – we need to have everyone understand that this could turn into LIV if we don’t play our cards right. We are smarter than they are – but part of the issue is they don’t have the facts and don’t seem to want to take the time to learn or maybe they just don’t care. It’s all about the money and feeling like they have been heard and are respected. The SRX thing is just baffling to me. Why don’t they get it? Oh, they do get it, and it’s a huge FU to us."

These communications directly correlate with subsequent decisions made by NASCAR, including the addition of North Wilkesboro Speedway (2023) and Bowman Gray Stadium (scheduled for 2025) to the Cup Series schedule. These venues were significant to SRX’s narrative and appeal.

Further illustrating NASCAR’s efforts to control the competitive landscape, Speedway Motorsports (SMI), a prominent track owner, was reportedly blocked by NASCAR from scheduling an SRX date in 2024. This move, intended by SMI for debt servicing purposes, was reportedly thwarted by NASCAR’s implementation of an "exclusion provision" in its track agreements.

When questioned about this decision, O’Donnell testified that NASCAR’s prohibition was rooted in its ongoing negotiations for a new broadcast rights agreement. He stated, "SRX started to look like NASCAR, so we said no." O’Donnell further asserted that NASCAR’s primary objective was to "gain as much TV revenue for the teams and tracks as possible." This suggests NASCAR viewed SRX’s presence on major television platforms as a potential impediment to its lucrative broadcast rights negotiations and a source of market confusion. The prevailing sentiment within NASCAR leadership, as indicated by O’Donnell, was that all participants in the sport should prioritize and focus their efforts on NASCAR itself during this critical period.

The internal dialogue continued with another text exchange on February 1, 2023, between Phelps and O’Donnell:

Phelps: "Oh great, another owner racing in SRX."
O’Donnell: "This is NASCAR. Pure and simple. Enough. We need legal to take a shot at this."
Phelps: "These guys are just plain stupid. Need to put a knife in this trash series."

When asked by Kessler why he requested legal intervention, O’Donnell responded, "I thought it looked more and more like NASCAR." His admission that he "just wanted legal to take a look at it" was presented as an attempt to understand potential infringements, rather than an overt directive to shut down the series.

Regarding the scheduling of North Wilkesboro and Bowman Gray, O’Donnell defended NASCAR’s actions by emphasizing the long-standing relationships with the Bowman Gray Stadium promotional family and the historical significance of North Wilkesboro within NASCAR’s origins. He explained that the Bowman Gray family sought to sell their lease, and NASCAR, with its deep roots in the area, was amenable to acquiring it. Similarly, SMI approached NASCAR with the desire for a Cup Series race at North Wilkesboro, which NASCAR granted. Kessler, however, pressed the point that these scheduling decisions followed the aforementioned communications, suggesting they were strategic responses to the perceived SRX threat.

The SRX series ultimately ceased operations, announcing its closure in January 2024, with the precise reasons remaining undisclosed. O’Donnell acknowledged under oath his continuous consideration of the possibility of breakaway racing series, a concern that falls within his professional responsibility to identify and mitigate "adverse headwinds to the NASCAR business."

Senior NASCAR leadership had previously expressed concerns in March 2022, following a meeting with team owners regarding charter negotiations, about the potential for teams to form or align with a competitor series. This led to NASCAR, under O’Donnell’s purview, implementing more stringent non-compete clauses in track agreements, extending for two years with an additional two-year option. O’Donnell clarified that the second two-year period was contingent upon agreement after the initial two years, asserting that these extended agreements were primarily for scheduling purposes, a point challenged by discovered emails. The applicability of these non-compete clauses to SRX racing at an SMI facility was a key area of inquiry. O’Donnell stated the clauses applied "If it looked like it infringed upon our IP."

The depth of concern was further underscored by the apprehension of O’Donnell and Prime that teams might collaborate with SRX and SMI to host multiple races at SMI facilities and even at Eldora Speedway (owned by Stewart) and Indianapolis Motor Speedway (owned by Cup Series team owner Roger Penske). O’Donnell expressed a desire to finalize track agreements with SMI by a specific Saturday to preempt teams from exploring such options. Prime and O’Donnell also considered the possibility of team owners selling their charters to Liberty Media (owner of Formula 1) or launching their own midweek series. The precedent set by LIV Golf’s challenge to the PGA Tour’s dominance was cited as a source of nervousness within NASCAR.

O’Donnell Advocates for Team Interests Amidst Negotiations

During his testimony, NASCAR President Steve O’Donnell presented himself as an advocate for the teams’ financial well-being. He detailed notes from a 2022 meeting with team owners, the first of its kind regarding upcoming charter negotiations, where he was informed that the existing model was "broken" for competitors. His notes specifically recorded that teams could be "one lost sponsors away from going out of business," and he acknowledged the validity of a financial report indicating a per-entry cost of $20 million per season. "We knew the industry was challenged," O’Donnell stated.

At the time of these discussions, the charter agreement allocated 65% of broadcast rights revenue to tracks, 25% to teams, and 10% to NASCAR. During that meeting, Curtis Polk, an investor in 23XI and chairman of the eventual Teams Negotiating Committee, outlined three primary team objectives: maximizing broadcast rights revenue, enhancing competition, and implementing a spending salary cap.

In a significant exchange, Jeff Gordon of Hendrick Motorsports reportedly asked Ben Kennedy, a descendant of NASCAR founder Bill France, if "the family was open to a new financial model" to support the teams. Kennedy’s affirmative response was later contradicted by O’Donnell’s testimony, who stated "No" when asked if that was indeed true.

Further highlighting O’Donnell’s perspective, a handwritten note from February 14, 2023, expressed his hope for a "younger" future leadership within NASCAR. He elaborated, "I was hoping the future board would include the next generation and was hoping to see that change," contrasting this with the current leadership, including Jim France, who is 81. O’Donnell suggested that a "legacy mindset" within the NASCAR Board "inhibited growth."

Despite these internal dynamics, O’Donnell maintained that he actively sought to advance the teams’ interests, even in discussions with Jim France. However, he conceded that out of 22 identified issues in the charter negotiations, 21 remained either neutral or favored NASCAR. When Kessler suggested that Mr. France acted as a "brick wall in the negotiations," citing a text from Prime, O’Donnell deflected, stating, "Those are your words, not mine."

Having been with NASCAR since 1996, O’Donnell, while passionate, maintained a composed demeanor throughout his testimony. He consistently emphasized his overarching objective: "My job every day is to grow the sport." He defined this growth as encompassing his superiors, teams, and fans, even if it meant risking displeasure from NASCAR’s leadership. He recounted being told by the Frances that they did not hire "Yes People" and that his role sometimes involved addressing broader issues within the sport.

O’Donnell also presented evidence of NASCAR’s own significant financial investments and losses, refuting the notion that the organization exclusively benefited from the sport. He cited the three-year investment in the Chicago Street Race, which reportedly cost NASCAR $55 million, as a strategic move to secure Amazon as a broadcast partner. Similarly, NASCAR reported a $6 million loss for the Mexico City race, undertaken due to its importance to Amazon, which contributed an additional $1 million to the race purse. Kessler questioned the accuracy of the reported losses, noting a discrepancy in the figures and O’Donnell attributing the remainder to "logistics."

Jenkins Faces Scrutiny Over Financial Disclosures

The morning of Thursday began with the cross-examination and re-examination of Bob Jenkins, owner of Front Row Motorsports. NASCAR attorneys attempted to portray Jenkins as misrepresenting FRM’s financials by leveraging his other business ventures. Jenkins had testified that Cup Series racing costs $20 million per car, but NASCAR counsel Lawrence Buterman presented discovery documents indicating that FRM’s highest expenditure on a Cup car was $14 million. Jenkins clarified that the $20 million figure represented an aggregate cost used in a broader team document, stating, "The median cost is $20 million; the fact I can do it for less helps me reduce my costs."

Buterman also highlighted documents suggesting that a portion of FRM’s claimed damages included a $1.2 million loss from Jenkins’ Truck Series team, an entity unrelated to the lawsuit and the Cup Series charter system. Jenkins acknowledged that these Truck Series losses should not have been included in the current claim.

A central tenet of the lawsuit alleges that NASCAR’s "take it or leave it" final charter offer on September 6, 2004, constituted anti-competitive behavior by a monopsonist. NASCAR presented evidence suggesting Jenkins employed a similar tactic in 2021 during discussions with 23XI Racing co-owner Denny Hamlin regarding a proposed merger between their teams. Jenkins’ text messages indicated a deadline of 5 p.m. for the deal, stating, "we can’t keep negotiating this forever."

Buterman drew parallels between Jenkins’ purported exclusivity clauses in his contracts with drivers and NASCAR’s track exclusivity clauses and charter goodwill provisions. Jenkins countered that these analogies were flawed, arguing that Hamlin could have acquired charters from other teams like Starcom or Rick Ware Racing, which were available at the time. He also addressed a text message exchange with President Jerry Freeze about Rick Ware Racing charging Hamlin for a charter, asserting that he did not impose terms on RWR and did not share privy financial information about the proposed merger. The merger ultimately failed because Toyota could only support one engine program, and Jenkins’ proposal involved two charters. He explained the deadline was necessary for Ford and Roush to ascertain his intentions regarding a move to Toyota.

Judge Bell Urges Expedited Proceedings

The trial proceedings concluded Thursday with Judge Kenneth D. Bell expressing frustration with the pace of the case, noting only three witnesses had been presented over three days. "I get the impression that this is not moving along the way we all would like it to," Bell stated. While hesitant to implement a chess clock, he urged future witnesses to answer questions more directly and with less evasion. "There are uncomfortable texts and emails for both sides, so just acknowledge it as a bad look and get on with it," Bell advised. He warned that he would begin directly instructing witnesses to answer if the issue persisted, expressing concern that the jury was experiencing redundancy and losing sight of the core arguments.

NASCAR’s intended witness, Roger Penske, is available only on Monday. NASCAR’s lead attorney, Chris Yates, requested that Penske be allowed to testify out of sequence, but Kessler objected, citing disruption to his planned presentation. Judge Bell sided with Kessler, emphasizing the importance of maintaining the narrative flow for the jury and noting that federal trials are inherently inconvenient. With the trial already extending beyond its initial two-week estimate and potentially into a third week, Bell stressed the unacceptability of further prolonging the jury’s commitment, especially with the holidays approaching.

NASCAR was informed that Penske would need to testify when his designated time arrives, as "federal trials are an inconvenience." The judge’s comments underscore the pressure on both sides to streamline their presentations and avoid unnecessary delays, ensuring the jury can reach a timely and informed verdict.

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