NASCAR’s Financial Defense Takes Center Stage as Teams Present Counterarguments in Antitrust Trial

In a legal battle that has brought the financial intricacies of professional stock car racing under intense scrutiny, NASCAR’s defense team began presenting its case on Wednesday, Day 8 of the trial involving 23XI Racing and Front Row Motorsports. The core of the litigation, heard in the Western District of North Carolina, centers on allegations that NASCAR, by virtue of its position as the sole purchaser of premier stock car racing teams, has utilized its monopsony power to financially disadvantage competitors and stifle overall competition within the Cup Series. The jury’s task is to determine if NASCAR’s charter system has indeed been employed to harm competition and team earnings.

The proceedings have underscored a fundamental divergence in interpretation, even when examining the same financial data. NASCAR’s Chief Financial Officer, Greg Motto, spent nearly two hours on the witness stand, primarily detailing the $400 million in distributions to the France family trust. NASCAR, structured as a private S Corporation for tax purposes, passes its income, losses, and other financial elements to its shareholders, who are members of the France-Kennedy family.

Jeffrey Kessler, lead attorney for 23XI and Front Row Motorsports, has argued that NASCAR could have allocated $720 million annually for charter payments to teams, a figure significantly higher than the $431 million distributed for 2025. Both Motto and a financial expert for NASCAR, Mark Zmijewski, contend that such an increase would have led to the organization’s bankruptcy. This stands in direct contrast to the analysis presented by the teams’ financial expert, Dr. Edward Snyder.

Kessler’s central argument throughout the trial has been that NASCAR’s financial projections and executive testimonies fail to account for potential cost-saving measures. He points to the 2020 season, when the COVID-19 pandemic necessitated widespread salary cuts across the organization, as an example of how compensation structures could be adjusted. Kessler posits that if teams were receiving the full financial benefit they believe they are entitled to, without anticompetitive constraints, cost reductions would have extended from top executives to track maintenance personnel.

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Furthermore, Kessler highlighted NASCAR’s sale of a significant portion of the former Auto Club Speedway land for $544 million. He argued that these proceeds could have been directed towards team payments rather than servicing debt incurred from the 2019 International Speedway Corporation merger. As an S-Corp, NASCAR is not obligated to distribute dividends to the France family, a point Kessler emphasized, suggesting that the sale of assets and subsequent distribution to the France family trust is essentially an internal reallocation of funds. Motto countered that tax obligations necessitate these distributions, while Kessler maintains that selling a track asset improves NASCAR’s equity by reducing debt. "You do whatever you can to minimize the taxes to the France family," Kessler stated to Motto during cross-examination.

Regarding NASCAR’s projected $10 million year-over-year revenue loss for 2025, Kessler characterized it as a "rounding error" for an entity of NASCAR’s size. He also challenged Zmijewski’s financial analysis, asserting that the expert did not adequately consider a hypothetical scenario where teams would be financially healthier absent anticompetitive practices. The day’s proceedings consistently demonstrated how both parties, using the same financial records, arrived at vastly different conclusions.

Following the teams’ presentation of their witnesses over the first seven and a half days, the defense strategy shifted to NASCAR calling its own witnesses. The initial witness for the defense was John Probst, NASCAR’s Senior Vice President of Innovation and Racing Development. Probst’s testimony focused on the development of the Next Gen car and aimed to support NASCAR’s assertion that teams possess a "reckless" spending problem.

Probst, whose career spans the automotive industry and multiple racing series before joining NASCAR in 2016, was intended to provide context on the historical landscape of motorsports. However, attempts to draw parallels to the American Open Wheel Split were met with sustained objections from Judge Kenneth D. Bell, who deemed the line of questioning "a little bit out in left field." Probst was permitted to briefly describe the IRL’s formation and subsequent split from CART in the 1990s.

The witness also explained the technical aspects of wind tunnels and the significant costs associated with their use, referencing a tunnel owned by Chip Ganassi. Kessler objected to Probst’s extended discussion on wind tunnel testing, leading Judge Bell to urge the defense to "move on." Probst testified that the Next Gen car, a single-source parts supplier specification car, was designed with the understanding that fans primarily focus on manufacturer-specific engines and bodies. The goal, he explained, was to reduce the financial burden on teams by limiting their need for extensive wind tunnel testing and proprietary part development. Probst stated that the concept was endorsed by 30 of the 36 charter holders prior to its formal development, a process that has cost NASCAR $14 million, with teams incurring no direct R&D expenses for the car itself. "I thought that was a pretty compelling endorsement by the team owner council," Probst remarked.

Probst further testified that NASCAR monitors team part purchases from approved vendors, requesting this data annually to demonstrate that increased part acquisition does not necessarily correlate with race wins. He cited Team Penske as an example of a team that consistently achieves success with fewer re-purchased single-source parts, while 23XI Racing has reportedly spent the most on parts over the past two years.

Addressing the issue of part repair versus replacement, Probst explained that NASCAR prohibits teams from repairing parts, interpreting "repair" as an opportunity for "modify" and "improve." This policy, he argued, is crucial for maintaining the parity that is a cornerstone of the Next Gen platform, preventing a potential spending war between teams.

During cross-examination by Kessler, Probst acknowledged that his clients are not challenging the Next Gen car itself but rather the non-compete clauses within the charter agreement. Kessler inquired about studies supporting the argument that preventing Cup Series cars from competing in other leagues is "pro-competitive." The exchange saw back-and-forth discussions regarding legal terminology and the clarity of the questions.

Internal emails revealed that prior to the Next Gen car’s development, NASCAR had considered adapting the previous Gen 6 car into a spec platform. Probst, in an email, noted that a modified Gen 6, dubbed "Gen 6*", would "increase the risk to NASCAR of a copycat series." When asked what NASCAR feared, Probst responded, "We don’t fear competition." Kessler then pointed out that NASCAR’s implementation of exclusivity clauses coincided with the development of the Race Team Alliance’s mid-week summer dirt series and the emergence of the SRX series. While NASCAR’s legal team objected, Judge Bell permitted the assertion. Probst deferred questions about track sanctioning agreements and exclusivity clauses, stating they were outside his purview. He likened NASCAR’s stance on protecting its brand to that of Coca-Cola, asserting that the company would not develop a new product only to allow a competitor to immediately replicate it. Probst also stated that no team had ever requested 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 not permit such use, to which Probst replied, "We would discuss it." When questioned about NASCAR Commissioner Steve Phelps’ comment regarding the SRX series, Probst deferred to Phelps for an answer.

An internal document was presented, outlining a task assigned to NASCAR executives, including Probst, Phelps, Steve O’Donnell, and Scott Prime, to determine the cost of establishing a Cup Series team from scratch. Probst explained this was an effort to gain a clearer understanding of competition costs, citing perceived inaccuracies in team cost reporting. Kessler suggested this exercise was linked to "Project Gold Codes," NASCAR’s contingency plan to potentially operate the Cup Series internally if teams did not renew their charter extensions for 2025. Probst maintained the exercise was altruistic and based on the information available. He confirmed contributing to the Gold Codes presentation, utilizing data from the aforementioned cost study.

Finally, Kessler presented a text message exchange between Probst and 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 "YES." 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 argued this indicated Project Gold Codes was a genuine consideration, not merely a contingency. Probst attributed the exchange to personal friendship and casual conversation.

France’s Testimony Concludes

Following a prior session marked by numerous instances of "I do not know" or "I do not remember," Jim France, NASCAR CEO, provided a direct response 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. He had been shown letters from prominent owners like Roger Penske, Rick Hendrick, Joe Gibbs, and Jack Roush, advocating for "evergreen" ownership statuses that would increase team equity without cost to NASCAR. France reiterated his discomfort with making permanent agreements in a constantly evolving world.

Despite an internal NASCAR graph suggesting a significant advantage for NASCAR in negotiations (21 wins or neutrals versus one win for teams), France maintained his stance against permanent charters. When asked what certainty he would require, he responded, "Don’t know ’til we get there."

Trial Logistics 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 Friday afternoon. The trial, originally scheduled for 10 days over two weeks, has seen daily sessions extended by an hour due to its pace. Closing arguments are now anticipated no sooner than Monday morning.

A contentious point arose regarding the source of information used by NASCAR’s attorney concerning Richard Childress’s exploration of selling a portion of his Cup Series team to a group led by Bobby Hillin Jr. This information was reportedly protected by a non-disclosure agreement, and Childress expressed visible agitation when it was raised during his cross-examination. After the jury’s dismissal on Wednesday, team attorney Danielle Williams indicated her intent to question NASCAR on six matters related to this breach, but Judge Bell deferred the discussion, emphasizing the need for both parties to reach a resolution before Thursday morning, or he would issue an order. Williams also noted that NASCAR had not yet provided the relevant documents to the opposing side.

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