rifan muazinIn a legal battle where common ground appears elusive, 23XI Racing and Front Row Motorsports are challenging NASCAR’s financial practices in a trial that has reached its eighth day. At the heart of the proceedings is the assertion that NASCAR, through its established monopsony status, has financially disadvantaged Cup Series teams and consequently undermined overall competition. While the court has already recognized NASCAR as a monopsony—the sole purchaser of premier stock car racing teams—the jury’s crucial task is to determine if this market power has been wielded to the detriment of teams’ earnings and the competitive landscape, specifically through the controversial charter system.
The financial records presented in court have become a focal point of contention, with each side interpreting the data to support their opposing narratives. NASCAR Chief Financial Officer Greg Motto spent nearly two hours on the witness stand, primarily detailing the $400 million in distributions made to the France family trust. It is important to note that NASCAR operates as a private S Corporation for tax purposes, meaning its financial outcomes are passed directly to its shareholders, who are members of the France-Kennedy family.
Jeffrey Kessler, lead attorney for 23XI and Front Row Motorsports, argued that NASCAR possessed the capacity to distribute $720 million annually in charter payments to teams, significantly more than the $431 million allocated for 2025. Conversely, Motto, supported by financial expert Mark Zmijewski, contended that such a distribution would lead to NASCAR’s bankruptcy. This starkly contrasts with the assessment provided by the teams’ financial expert, Dr. Edward Snyder. Kessler’s ongoing argument throughout the trial is that NASCAR executives and their experts consistently base their financial projections on a scenario where salaries remain unchanged and the business operates precisely as it did in the previous year. He has repeatedly drawn parallels to the COVID-19 pandemic in 2020, when widespread salary reductions were implemented across all levels of NASCAR until the situation stabilized. Kessler suggested that if teams were receiving the compensation they believed they were entitled to, absent anticompetitive practices, then even individuals like Jim France and track maintenance crews would have experienced similar adjustments in their earnings.
Kessler further posited that the $544 million NASCAR received from the sale of a significant portion of the former Auto Club Speedway land could have been allocated to team payments instead of servicing debt incurred from the 2019 merger with International Speedway Corporation. He also highlighted that, as an S-Corp, NASCAR is not legally obligated to issue dividend payments to the France family. Motto maintained that NASCAR must fulfill its tax obligations, which necessitates payments to the France family given the company’s S-Corp structure. Kessler countered that selling a NASCAR-owned track improved its overall equity by reducing debt. He characterized the financial transactions as merely a redistribution of funds within the family, stating to Motto during cross-examination, "You do whatever you can to minimize the taxes to the France family." Regarding NASCAR’s projected $10 million year-over-year revenue loss in 2025, Kessler dismissed it as a "rounding error" for an entity of NASCAR’s magnitude.
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Kessler also cross-examined financial expert Mark Zmijewski, referred to as Professor Z, asserting that Zmijewski had not adequately accounted for NASCAR’s financial records within a hypothetical "but for" scenario where teams would be more financially robust due to the absence of anticompetitive harm. The day concluded with both parties drawing divergent conclusions from the same financial records, a pattern that has characterized much of the trial.
The initial seven and a half days of the trial focused on the plaintiffs’ witnesses, with NASCAR conducting cross-examinations and subsequent re-examinations. On Wednesday afternoon, the roles reversed as NASCAR commenced its defense, presenting its own witnesses through a similar back-and-forth examination process.
The first witness called by NASCAR was John Probst, Senior Vice President of Innovation and Racing Development. Probst’s testimony centered on the development of the Next Gen car and supported NASCAR’s position that teams possess a "reckless" spending problem, a point previously articulated by the sanctioning body. Probst, who began his career with Ford Motor Company in the mid-1990s and later competed in CART IndyCar Series and NASCAR with Red Bull Racing and Chip Ganassi Racing before joining NASCAR in 2016, was intended to provide context on the historical American Open Wheel Split as a cautionary tale against the emergence of competing series. However, objections from Judge Kenneth D. Bell regarding the relevance of these questions were sustained, limiting Probst’s testimony on this matter.
Probst was permitted to offer a brief overview of the split between CART and the Indy Racing League in the 1990s, stating that the IRL began racing at the Indianapolis 500, established its own series, fielded its own teams, collaborated with OEMs to create additional teams, and ultimately fractured the sport. He also explained the function of a wind tunnel, referencing the Laurel Hill Tunnel owned by Ganassi, to illustrate the substantial costs teams incurred for such facilities, which could run into thousands of dollars per hour. Kessler objected to Probst’s extended explanation of wind tunnel testing history, prompting Judge Bell to urge the prosecution to move forward. "This is all very interesting and we understand your point but let’s move on," Bell advised.
Probst elaborated that the Next Gen car, designed with single-source supplied parts, was conceptualized under the premise that fans are primarily interested in manufacturer-specific engines and bodywork. He argued that other components are largely imperceptible to fans and therefore less significant, aiming to reduce team expenditure on wind tunnel testing and in-house parts engineering. According to Probst, the concept received endorsement from 30 of the 36 charter holders prior to its formal development, a process that cost NASCAR $14 million but teams nothing, as they are no longer responsible for research and development. "I thought that was a pretty compelling endorsement by the team owner council," Probst stated.
Probst testified that NASCAR monitors team part purchases from approved vendors, requesting this data once or twice annually under the charter agreement. This data, he explained, is used to demonstrate to teams that increased part purchases do not necessarily correlate with race wins. He cited Team Penske as an example of a consistently winning team that purchases the fewest re-supplied parts, while 23XI Racing has incurred the highest expenditures in this area over the past two years. Probst clarified that while some teams, like Front Row Motorsports as testified by owner Bob Jenkins, may resent the inability to repair parts due to the higher cost of repeated new purchases, NASCAR prohibits it because "repair" for teams often translates to "modify" and "improve." Allowing such modifications, Probst asserted, would incite a spending war among teams and undermine the parity that was a core objective of the seventh-generation platform.
Under cross-examination by Kessler, Probst acknowledged that his clients were not challenging the Next Gen car itself, but rather the non-compete restrictions embedded within the charter agreement. Kessler questioned Probst about studies supporting the prevention of Cup Series cars being used in other leagues as "pro-competitive," leading to a back-and-forth exchange over legal terminology and question clarity.
Probst also revealed in discovered emails that NASCAR had considered adapting the previous Gen 6 car into a spec platform. When asked why a new car was chosen over this option, Probst cited an email in which the Gen 6* (the proposed modified version of the old car) would "increase the risk to NASCAR of a copycat series." When Kessler inquired about NASCAR’s fears, Probst responded, "We don’t fear competition." Kessler then pointed out that NASCAR’s inclusion of exclusivity clauses coincided with the Race Team Alliance developing a mid-week summer dirt series and the debut of the SRX series. While NASCAR’s legal team objected, Judge Bell permitted the line of questioning. Probst stated that track sanctioning agreements were outside his purview and he could not comment on exclusivity agreements. He compared NASCAR’s brand protection stance to that of Coca-Cola, arguing that Coke would not develop a new recipe and then permit Pepsi to replicate it. Probst also claimed that no team had ever requested permission to use a Gen 6 or Next Gen car in a non-NASCAR division, adding, "All they have to do is ask." Kessler countered that NASCAR would never permit teams to use the Next Gen car in a non-NASCAR series, to which Probst replied, "We would discuss it." Kessler then questioned Probst about NASCAR Commissioner Steve Phelps’s reported sentiment that "someone needs to put a knife" into the "trash" SRX series. Probst deferred, stating, "I’d assume Steve would answer that question."
Kessler presented an internal document detailing an exercise involving NASCAR executives, including Probst, Phelps, Steve O’Donnell, and Scott Prime, tasked with calculating the cost of establishing a Cup Series team from scratch. Probst explained that this exercise was conducted because teams often provided inaccurate or inconsistent cost data, and NASCAR sought a clearer understanding of competition costs. Kessler suggested this was an exercise to inform "Project Gold Codes," NASCAR’s contingency plan to operate the Cup Series "vertically" and run a series in-house if all teams declined the 2025 charter extension. Probst maintained that the exercise was altruistic and undertaken at face value. He admitted to contributing to the Gold Codes slide presentation, utilizing data from the aforementioned study, but denied being its sole author. Finally, Kessler questioned Probst about a text message exchange with his chief of staff, Tom Swindell, the morning after the September 6, 2024, charter extension deadline. Swindell’s message "RIP Project Gold Codes" was met with a "YES" from Probst, followed by Swindell’s inquiry regarding the leverage of 23XI and FRM in their "holding out," to which Probst responded, "I can’t see any." Kessler aimed to demonstrate that Project Gold Codes was more than a contingency plan, but a tangible consideration. Probst attributed the exchange to personal friendship and casual texting. "No further questions, your honor," Kessler concluded his cross-examination.
France Finishes Up
Following a Tuesday session where he repeatedly invoked "I do not know" or "I do not remember" to over a dozen questions, Jim France addressed a direct inquiry regarding his opposition to permanent charters for Cup Series team owners. "I don’t have a sightline to the future, and I don’t feel comfortable making a promise I don’t know if I can keep," France stated. On Tuesday, France had been shown letters from prominent team owners Roger Penske, Rick Hendrick, Joe Gibbs, and Jack Roush, urging him to make ownership statuses "evergreen" to increase equity without cost to NASCAR. "I don’t know how you can set anything in this changing world we’re in as permanent," France reiterated. "I’m just not comfortable making agreements that go on forever." France asserted that NASCAR had conceded on numerous points, a claim contradicted by an internal graph indicating 21 wins or neutral outcomes for NASCAR versus one for the teams. However, he remained firm on the issue of permanent charters. When asked about the level of certainty he would require, France responded, "Don’t know ’til we get there."
Loose Ends
Before dismissing the jury, Judge Bell informed them of their continued involvement next week, noting NASCAR’s intention to conclude its case by Friday evening. The original schedule anticipated a 10-day trial spanning two weeks. Delays have necessitated an extension of each court day by an hour this week, pushing closing arguments to Monday morning at the earliest.
A separate issue emerged concerning the source of information presented by NASCAR’s attorney regarding Richard Childress’s exploration of selling a portion of his Cup Series team to a group led by former driver Bobby Hillin Jr. This information was subject to a non-disclosure agreement, and Childress had expressed visible agitation when it was used during his cross-examination on Tuesday. After the jury was dismissed on Wednesday, team attorney Danielle Williams indicated she had six questions on the matter, but Judge Bell declined to hear them, noting that NASCAR had not yet provided the relevant documents to the opposing side. The teams are seeking to identify NASCAR’s source who allegedly breached the NDA. Judge Bell stated that both parties must reach a resolution before Thursday morning, or he would issue an order with his predetermined course of action.
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