NASCAR Mounts Defense in Antitrust Trial Amidst Conflicting Financial Interpretations

In a legal battle where agreement is scarce, NASCAR’s defense team commenced its presentation on Day 8 of the ongoing trial involving 23XI Racing and Front Row Motorsports. The core of the legal dispute centers on whether NASCAR has leveraged its position as the sole buyer of premier stock car racing teams—a market dynamic established as a monopsony by the Western District of North Carolina—to financially disadvantage teams and stifle overall competition within the Cup Series. The jury’s crucial task is to determine if NASCAR’s actions, particularly concerning the charter system, have indeed harmed competition and the financial viability of participating teams.

The courtroom on Wednesday became a stage for starkly divergent interpretations of the same financial data, as NASCAR’s Chief Financial Officer, Greg Motto, took the stand. Over nearly two hours, Motto primarily addressed the $400 million in distributions allocated to the France family trust. Structurally, NASCAR operates as a private S Corporation, a designation that means its financial outcomes—profits, losses, deductions, and credits—are passed through to its shareholders, who in this instance are members of the France-Kennedy family.

Jeffrey Kessler, lead counsel for 23XI and Front Row Motorsports, presented an argument suggesting NASCAR could have allocated $720 million annually for charter payments to teams, a figure significantly higher than the $431 million earmarked for 2025. Motto, corroborated by financial expert Mark Zmijewski, countered that such an increase would have led to NASCAR’s bankruptcy. This projection stands in direct opposition to the analysis provided by the teams’ financial expert, Dr. Edward Snyder. Kessler has consistently maintained throughout the proceedings that NASCAR’s financial projections, whether from executives or their experts, are based on the assumption that all salaries and operational structures remain unchanged from the previous year. He drew a parallel to the cost-saving measures implemented across NASCAR in 2020 due to the COVID-19 pandemic, which saw salary reductions from the highest echelons to track maintenance crews until the situation stabilized. Kessler posited that if teams were receiving equitable compensation, akin to what they believe they are entitled to absent anticompetitive practices, similar adjustments would have been necessary for all levels of NASCAR operations, including those of Jim France and track personnel.

Further financial arguments were presented regarding NASCAR’s sale of a significant portion of the former Auto Club Speedway land for $544 million. Kessler contended that these proceeds could have been directed towards team payments rather than servicing debt incurred from the 2019 merger with International Speedway Corporation. He also highlighted that as an S-Corp, NASCAR is not obligated to issue dividend payments to the France family. Motto asserted that NASCAR is legally required to pay taxes, necessitating distributions to the France family. Kessler, however, argued that the sale of a track asset enhanced NASCAR’s overall equity by reducing its debt burden. He characterized the financial transfers as essentially moving money within the same family entity, prompting the exchange, "You do whatever you can to minimize the taxes to the France family," directed at Motto during cross-examination. Regarding a reported $10 million year-over-year revenue loss for NASCAR in 2025, Kessler dismissed it as a "rounding error" for an organization of NASCAR’s magnitude.

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Kessler also engaged with Mark Zmijewski, referred to as Professor Z, challenging the financial expert’s methodology. Kessler argued that Professor Z’s analysis of NASCAR’s financial records within the "but for" scenario—a hypothetical where teams are financially healthier due to the absence of anticompetitive harm—was not adequately conducted. The day concluded with the recurring theme of both parties reaching fundamentally different conclusions from the same financial data.

The initial seven and a half days of the trial involved the plaintiffs’ legal teams presenting their witnesses, followed by NASCAR’s cross-examinations and subsequent re-examinations. On Wednesday afternoon, the roles reversed as NASCAR began building its defense with its own roster of witnesses.

The first witness called by NASCAR was John Probst, Senior Vice President of Innovation and Racing Development. Probst’s testimony primarily focused on the development of the NextGen car and the assertion that teams possess a "reckless" spending problem. Probst, whose career began in the mid-1990s with Ford Motor Company, leading to participation in CART Indy Car Series and later NASCAR with Red Bull Racing and Chip Ganassi Racing before joining NASCAR in 2016, was intended to illustrate historical parallels to the American Open Wheel Split as a cautionary tale against the proliferation of competing series. However, these lines of questioning were met with objections from Judge Kenneth D. Bell, who sustained them, citing relevance and stating, "We’re getting a little bit out in left field."

Probst was permitted to offer a concise overview of the CART and Indy Racing League split in the 1990s, explaining that the IRL launched its own series, including the Indianapolis 500, formed its own teams, and collaborated with Original Equipment Manufacturers (OEMs) to expand its grid, ultimately leading to the division of the sport. Probst was also used to explain the concept and cost of wind tunnel testing, referencing the Laurel Hill Tunnel owned by Ganassi to illustrate the significant expenditure teams incur for such facilities, with costs reportedly running into thousands of dollars per hour. Kessler objected to Probst’s extended discourse on wind tunnel history, prompting Judge Bell to urge the prosecution to proceed.

Probst elaborated on the NextGen car’s design philosophy, which prioritizes fan interest in manufacturer-specific engines and bodies. He argued that other components, being less visible to fans, were deemed less critical, thereby aiming to reduce team expenditures on wind tunnel time and in-house part engineering. Probst stated that the concept of the NextGen car received endorsement from 30 of the 36 charter holders prior to its formal development. He highlighted that this development has cost NASCAR $14 million, with teams incurring no direct cost as they are no longer responsible for in-house research and development of the car’s core components. Probst described this broad endorsement as a "pretty compelling endorsement by the team owner council."

NASCAR monitors team part purchases from approved vendors, requesting this data annually or biannually under the charter agreement. Probst explained that this data is used to demonstrate to teams that increased part procurement does not necessarily correlate with on-track success. He cited Team Penske as an example of a consistently winning team that utilizes fewer re-purchased single-source supplied parts, contrasting this with 23XI Racing, which he noted has had the highest expenditure on parts over the past two years.

Probst addressed the contention from some teams, including Front Row Motorsports as testified by owner Bob Jenkins, that the prohibition on repairing parts, necessitating repeated purchases of new ones, incurs higher costs. Probst explained that NASCAR’s stance is that "repair" for teams often translates to "modify" and "improve," and allowing such practices would risk reigniting a spending war and undermining the parity intended by the NextGen platform.

During cross-examination by Kessler, Probst acknowledged that his clients are not challenging the NextGen car itself but rather the non-compete clauses within the charter agreement. Kessler inquired about studies supporting the assertion that prohibiting teams from using Cup Series cars in other racing series is "pro-competitive." The exchange saw back-and-forth regarding legal terminology and the clarity of the questions.

Emails discovered during the proceedings revealed that prior to the NextGen car’s development, NASCAR had considered adapting the previous Gen6 car into a spec platform. Probst confirmed that the proposed "Gen6" would have been a modified version of the existing car. When questioned about the rationale for developing an entirely new car instead of modifying the Gen6, Probst cited an email stating that the Gen6 would "increase the risk to NASCAR of a copycat series." When asked what NASCAR feared in terms of competition, Probst responded, "We don’t fear competition."

Kessler then presented the argument that NASCAR’s implementation of exclusivity clauses coincided with the Race Team Alliance (RTA) developing a mid-week summer dirt series and the emergence of the Superstar Racing Experience (SRX). 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 likened NASCAR’s brand protection strategy to that of Coca-Cola, which he argued would not develop a new product only to have a competitor immediately replicate it. Probst also asserted that no team had ever requested permission to use Gen6 or NextGen cars in non-NASCAR divisions, adding, "All they have to do is ask." Kessler countered by expressing certainty that NASCAR would not permit such usage. Probst replied, "We would discuss it." Kessler then referenced a statement by NASCAR Commissioner Steve Phelps suggesting that "someone needs to put a knife" into the SRX series. Probst deferred, stating, "I’d assume Steve would answer that question."

Kessler presented an internal NASCAR document detailing a task assigned to executives, including Probst, Phelps, Steve O’Donnell, and Scott Prime, to ascertain the cost of establishing a Cup Series team from scratch. Probst explained that this exercise was driven by the perception that teams often provide inaccurate or incomplete cost data, and NASCAR sought to gain a more precise understanding of competition-related expenses. Kessler suggested this was an effort to inform "Project Gold Codes," NASCAR’s contingency plan to potentially operate the Cup Series "vertically" in-house if teams refused to extend their 2025 charter agreements. Probst maintained that the exercise was conducted with altruistic intentions. He conceded contributing to the Project Gold Codes document, utilizing data from the aforementioned cost study, but denied being its sole author.

Finally, Kessler questioned Probst about a text message exchange with his chief of staff, Tom Swindell, following the September 6, 2024, charter extension deadline. Swindell’s message, "RIP Project Gold Codes," was met with Probst’s affirmative reply. Swindell then inquired about the leverage held by 23XI and FRM in their continued resistance, to which Probst responded, "I can’t see any." Kessler aimed to establish that Project Gold Codes was more than a mere contingency. Probst characterized the exchange as a private conversation between friends discussing work matters.

France Concludes Testimony Amidst Charter Permanency Debate

Following a day of what were described as evasive answers, where Jim France, NASCAR CEO, offered numerous instances of "I do not know" or "I do not remember," he directly addressed the question of his opposition to permanent charters for Cup Series team owners. France stated, "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." On Tuesday, France was presented with letters from prominent team owners Roger Penske, Rick Hendrick, Joe Gibbs, and Jack Roush, urging him to make ownership statuses "evergreen," a move they argued would enhance franchise equity without imposing costs on NASCAR. France reiterated his stance, stating, "I don’t know how you can set anything in this changing world we’re in as permanent. I’m just not comfortable making agreements that go on forever." He dismissed an internal graph that allegedly showed NASCAR holding 21 wins or neutral positions versus one win for the teams, asserting that NASCAR had made concessions on various points. When asked about the level of certainty he would require to consider permanent charters, France replied, "Don’t know ’til we get there."

Trial Timeline and Unresolved Matters

Judge Bell informed the jury that their service would extend into the following week, with NASCAR aiming to conclude its case by 5:30 PM on Friday. The trial, initially scheduled for 10 days over two weeks, has seen daily sessions extended by an hour due to a slower pace, pushing closing arguments to Monday morning at the earliest.

A procedural matter arose concerning the source of information used 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 reportedly protected by a non-disclosure agreement, and Childress appeared visibly displeased when it was brought up during his cross-examination. After the jury’s dismissal on Wednesday, team attorney Danielle Williams indicated a desire to ask 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 court seeks to resolve who breached the NDA before Thursday morning, with Judge Bell indicating he would issue an order if a resolution was not reached.

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