SRX's Shadow Looms Large as NASCAR Faces Antitrust Scrutiny

The antitrust trial brought forth by 23XI Racing and Front Row Motorsports against NASCAR has seen the now-defunct Superstar Racing Experience (SRX) emerge as a pivotal element, potentially shaping the jury’s perception of NASCAR’s market dominance and competitive practices. Over four days of proceedings, legal arguments and internal communications have painted a picture of NASCAR leadership’s heightened awareness and subsequent reactions to SRX, a rival series that, despite its brief existence, has become a significant talking point in the ongoing legal battle.

At the heart of this antitrust case lies the question of whether NASCAR has leveraged its monopolistic position in premier stock car racing to stifle competition or disadvantage entities operating within the sport, such as racing teams. Jeffrey Kessler, the attorney representing 23XI and Front Row Motorsports, has systematically questioned NASCAR executives, including President Steve O’Donnell and EVP of Strategy Scott Prime, to establish a narrative of proactive measures taken by the sanctioning body in response to the perceived threat posed by SRX.

The legal strategy appears to hinge on demonstrating that NASCAR’s actions, particularly concerning charter agreement negotiations and track scheduling, were not merely coincidental but were directly influenced by the rise of SRX. This is evidenced by internal communications revealed during the trial, where NASCAR officials expressed considerable concern about SRX’s growing proximity to NASCAR’s own identity and audience.

NASCAR’s apprehension regarding SRX began to escalate during the summer of 2022, coinciding with the second season of the midweek short-track series. Crucially, this period also saw NASCAR engaged in critical negotiations with teams over the terms of the charter agreement extension. The potential for teams to reject NASCAR’s proposals en masse was a palpable concern, as highlighted by Prime, who noted the possibility of teams and drivers opting to participate in SRX.

Related News :

This concern was amplified as SRX, initially conceived in 2021 as a series featuring retired racing legends on a mix of dirt and paved short tracks, began to incorporate more active Cup Series drivers. By its final season in 2023, notable figures like Brad Keselowski participated full-time, with cameo appearances from stars such as Kyle Busch, Chase Briscoe, and Chase Elliott, blurring the lines between SRX and NASCAR’s premier circuit.

Steve O’Donnell acknowledged this shift during his testimony. "I recall we all became concerned with the look and the feel of the series, yes," he stated under questioning. While O’Donnell pointed out that the 2016-2024 charter agreement did not explicitly prohibit drivers from participating in other series, the involvement of team owners, including Denny Hamlin and Justin Marks, alongside the co-founding role of Tony Stewart, a then-charter-holding team owner, raised significant alarm bells within NASCAR’s leadership.

O’Donnell recounted a conversation with Brett Frood, then-president of Stewart-Haas Racing, which offered temporary reassurance. "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 depth of NASCAR’s concern is further illuminated by a discovered email chain from June 29, 2022, involving O’Donnell, Prime, Ben Kennedy, and NASCAR President Steve Phelps. The exchange reveals a palpable anxiety about SRX’s impact, particularly its ability to draw talent and eyeballs away from NASCAR.

Internal Communication Highlights:

In the unearthed exchange, O’Donnell questioned Justin Marks’ participation in SRX, with Ben Kennedy expressing disappointment. Prime articulated the sentiment: "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 further elaborated on the perceived betrayal of loyalty: "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 concurred, noting, "North Wilkesboro and Bowman Gray next year with Jr and friends if we don’t make moves." O’Donnell proposed an aggressive scheduling strategy: "How about this for All Star – make it a combo – Bowman and Wilkes Fri/Sun." Prime responded enthusiastically, "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 underscored the urgency, stating, "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."

This internal dialogue directly preceded NASCAR’s decision to add both North Wilkesboro Speedway (in 2023) and Bowman Gray Stadium (scheduled for 2025) to the Cup Series calendar.

Furthermore, Speedway Motorsports (SMI), a significant track owner, reportedly sought to schedule an SRX date in 2024, ostensibly for debt servicing purposes. However, NASCAR allegedly blocked this endeavor by implementing exclusion provisions in track agreements, preventing SMI from hosting the SRX race. O’Donnell defended this decision, citing the ongoing negotiation of new broadcast rights agreements and SRX’s increasing resemblance to NASCAR, which he felt created market confusion and potentially undermined NASCAR’s own revenue-generating opportunities. He emphasized that, during such critical TV negotiations, all stakeholders should prioritize and align with NASCAR.

A subsequent text exchange on February 1, 2023, between Phelps and O’Donnell further underscores their persistent concern. Phelps stated, "Oh great, another owner racing in SRX," to which O’Donnell responded, "This is NASCAR. Pure and simple. Enough. We need legal to take a shot at this." Phelps added, "These guys are just plain stupid. Need to put a knife in this trash series." When questioned by Kessler about the impetus behind involving legal counsel, O’Donnell reiterated, "I thought it looked more and more like NASCAR." He maintained his intention was merely to have legal review the situation.

Regarding the addition of Wilkesboro and Bowman Gray to the Cup schedule, Kessler framed these moves as anti-competitive. O’Donnell, however, cited the deep-rooted relationship between NASCAR and the Bowman Gray family, dating back generations, and the track’s ongoing weekly racing program. He explained that the lease acquisition was driven by the family’s desire to sell and NASCAR’s long-standing ties to the venue. Similarly, SMI’s request for a Cup race at Wilkesboro, a track they own, was granted. Kessler pressed the point that these scheduling decisions followed internal discussions explicitly mentioning bringing Cup racing to these venues as a response to SRX.

SRX’s planned 2024 season never materialized, with the series announcing its closure in January 2024, citing reasons that remain largely undisclosed. O’Donnell conceded that he "thinks about it every day" regarding the possibility of breakaway series, acknowledging it as part of his responsibility to identify potential threats to NASCAR’s business.

In March 2022, during initial charter negotiations, senior NASCAR leadership expressed concerns in an email chain about teams potentially forming or joining a rival series. This led to the implementation of more stringent non-compete clauses in track agreements, initially extending for two years with an additional two-year option. O’Donnell clarified that the second two-year period was contingent on agreement after the initial term, asserting the extended agreements were primarily for scheduling purposes, a claim disputed by the discovered emails. The scope of these non-compete clauses, particularly in relation to SRX racing at SMI facilities, remains a point of contention. O’Donnell stated they applied if the activity "looked like it infringed upon our IP."

The anxieties of O’Donnell and Prime extended to scenarios where teams might form their own series, partner with SRX, or, in conjunction with SMI, run multiple races at SMI venues and potentially at Eldora Speedway (owned by Tony Stewart) and Indianapolis Motor Speedway (owned by Cup Series team owner Roger Penske). O’Donnell indicated a desire to finalize track agreements with SMI by a specific Saturday to preempt such team explorations. Prime and O’Donnell also considered the possibility of team owners selling their charters to Liberty Media (owner of Formula 1) or launching a midweek series. The emergence of LIV Golf and its challenge to the PGA Tour’s established order was cited as a significant factor creating nervousness within NASCAR circles.

O’Donnell’s Perspective on Team Finances and Growth:

During the trial, O’Donnell’s testimony also shed light on NASCAR’s internal discussions regarding the financial health of its teams. Notes from a 2022 meeting with team owners regarding charter negotiations revealed an acknowledgment that the existing model was "broken" for competitors, with O’Donnell noting the precarious position of teams one sponsor loss away from potential insolvency. His notes stated, "the business model is broken for the teams," after reviewing financial reports suggesting car entry costs could reach $20 million per season.

The prevailing charter agreement structure at the time allocated 65% of broadcast rights revenue to tracks, 25% to teams, and 10% to NASCAR. In that same meeting, Curtis Polk, an investor in 23XI and chairman of the eventual Teams Negotiating Committee, outlined three primary team objectives: maximizing broadcast rights revenue, increasing competition, and implementing a spending salary cap. Jeff Gordon of Hendrick Motorsports inquired if the "family" (referring to the France family, NASCAR’s ownership) was open to a new financial model to support teams, to which Ben Kennedy reportedly responded affirmatively. However, when questioned by Kessler, O’Donnell stated, "No," indicating this openness was not ultimately realized.

Further communications revealed O’Donnell’s belief that a "legacy mindset" within the NASCAR Board, embodied by its older members, "inhibited growth." He expressed hope for a younger leadership generation to be included in future board compositions. Despite these internal challenges, O’Donnell maintained that he actively worked to advance team interests, even in discussions with Jim France, though he acknowledged significant obstacles. When Prime suggested Jim France acted as a "brick wall" in negotiations, O’Donnell deflected, stating, "Those are your words, not mine."

O’Donnell, a long-time NASCAR executive, emphasized his daily commitment to growing the sport for all stakeholders – management, teams, and fans. He asserted that his role sometimes required him to voice concerns, even if it meant disagreeing with his superiors, referencing the France family’s stated preference for executives who are not merely "Yes People."

Illustrating NASCAR’s own financial commitments and risks, O’Donnell cited the three-year stint of racing in downtown Chicago, which cost NASCAR an estimated $55 million. This investment, he explained, was strategic, paving the way for Amazon’s entry as a broadcast partner. Similarly, NASCAR incurred a $6 million loss racing in Mexico City, a decision made to align with Amazon’s interests and secure an additional $1 million in race purse. Kessler questioned the specifics of these losses, with O’Donnell attributing the remaining deficit beyond logistics to broader strategic investments.

Cross-Examination of Bob Jenkins and Trial Pace:

The trial also featured the cross-examination of Bob Jenkins, owner of Front Row Motorsports. NASCAR attorneys sought to portray Jenkins as misrepresenting FRM’s financial figures, presenting discovery documents indicating a maximum expenditure of $14 million per Cup car for FRM, contrasting with Jenkins’ testimony of $20 million. Jenkins clarified that the $20 million figure represented an aggregate cost across multiple teams used in a team document, with his own team operating at a median cost.

NASCAR also highlighted a $1.2 million loss from Jenkins’ Truck Series team, arguing it was unrelated to the lawsuit and the Cup Series charter system, a point Jenkins conceded should not have been included in damages claims.

A central argument of the lawsuit is that NASCAR’s "take it or leave it" final charter offer on September 6, 2004, constituted anti-competitive behavior by a monopsony. NASCAR attorney Lawrence Buterman presented evidence of Jenkins employing a similar tactic in a 2021 proposed merger between FRM and 23XI Racing, where Jenkins texted Denny Hamlin, "we can’t keep negotiating this forever… why we decided we had to have a deal by 5 p.m." Jenkins countered that this analogy was flawed, as Hamlin could have acquired charters from other available teams, unlike the constrained charter system being debated.

The day concluded with Judge Kenneth D. Bell expressing frustration with the trial’s slow pace, having seen only three witnesses in three days. He urged witnesses to answer questions more directly and avoid excessive 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 expressed concern about the jury’s potential fatigue and the unacceptability of extending the two-week trial into a third week, especially with the holidays approaching. NASCAR’s request to call Roger Penske out of order on Monday was denied by Bell, who prioritized the jury’s experience and the intended narrative flow of the proceedings.