Superstar Racing Experience Emerges as Key Factor in NASCAR Antitrust Trial

The antitrust trial involving 23XI Racing and Front Row Motorsports against NASCAR has entered its fourth day, with the now-defunct Superstar Racing Experience (SRX) series increasingly becoming a central focus, potentially influencing the jury’s perception of NASCAR’s market dominance and competitive practices. Attorneys for the plaintiffs have strategically presented evidence suggesting that NASCAR leadership was acutely aware of SRX as a potential rival and took tangible actions in response. This line of questioning is crucial as the trial aims to determine whether NASCAR has leveraged its monopolistic position in premier stock car racing to stifle competition and disadvantage entities like race teams.

Over the past two days, NASCAR executives, including President Steve O’Donnell and EVP of Strategy Scott Prime, have been under scrutiny by 23XI and Front Row Motorsports attorney Jeffrey Kessler. Kessler has meticulously built a narrative portraying NASCAR’s leadership as increasingly concerned about SRX’s growing presence and influence. The core of the plaintiffs’ argument hinges on whether NASCAR’s actions, prompted by the perceived threat of SRX, constitute anti-competitive behavior.

The timing of NASCAR’s heightened concern regarding SRX coincided with critical charter agreement negotiations during the summer of 2022. As NASCAR engaged with teams about extending the charter agreement, internal discussions revealed anxieties about the potential for teams to reject NASCAR’s proposals and explore alternative racing avenues, such as SRX. Emails and testimony from NASCAR officials, including Scott Prime, indicate that as early as June 2022, there was consideration of teams and drivers potentially participating in SRX if charter negotiations faltered.

A significant aspect of NASCAR’s apprehension stemmed from SRX’s evolving identity. Launched in 2021, SRX initially featured a roster of retired racing legends competing on a mix of dirt and paved short tracks, augmented by local track champions. However, by its second season, the series began incorporating more active Cup Series drivers. The 2023 season saw prominent figures like Brad Keselowski compete full-time, with guest appearances from stars such as Kyle Busch, Chase Briscoe, and Chase Elliott, blurring the lines between SRX and the premier NASCAR series.

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Steve O’Donnell acknowledged this shift during his testimony, stating, "I recall we all became concerned with the look and the feel of the series, yes." While the existing 2016-2024 charter agreements did not explicitly prohibit drivers from participating in other series, the involvement of team owners, such as Denny Hamlin and Justin Marks, who also held charters, became a point of significant concern for NASCAR leadership. Furthermore, SRX’s co-founding by Tony Stewart, a prominent charter-holding team owner at the time, added another layer of complexity. O’Donnell recounted a conversation with then-Stewart-Haas Racing president Brett Frood, which temporarily assuaged his concerns by emphasizing SRX’s original intent to differentiate itself from NASCAR and avoid featuring Cup Series drivers. However, O’Donnell noted that the series’ trajectory ultimately contradicted this initial plan.

The internal communications presented as evidence reveal a palpable sense of unease within NASCAR’s executive ranks regarding SRX. A discovered conversation from June 29, 2022, between Scott Prime, Steve O’Donnell, Ben Kennedy, and Jim Phelps, paints a vivid picture of their strategic deliberations.

In this exchange, Prime expressed disappointment, stating, "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 echoed these sentiments, highlighting the participation of prominent figures and expressing frustration: "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 and Phelps further elaborated on the perceived threat, with Prime suggesting, "Agreed – North Wilkesboro and Bowman Gray next year with Jr and friends if we don’t make moves." Phelps ominously warned, "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 appears to have directly influenced NASCAR’s subsequent decisions. In the years following these discussions, both North Wilkesboro Speedway (in 2023) and Bowman Gray Stadium (scheduled for 2025) were added to the Cup Series schedule.

Further evidence of NASCAR’s proactive measures against SRX emerged when Speedway Motorsports (SMI), a prominent track owner, sought to schedule an SRX date in 2024 for debt servicing purposes. NASCAR reportedly blocked this plan, citing exclusion provisions in their agreements with SMI. When questioned about this decision during his testimony, O’Donnell stated that NASCAR was in the midst of negotiating new broadcast rights agreements. He explained that because SRX had begun to resemble NASCAR in its presentation and participant pool, NASCAR deemed it a competitive threat and opted to prevent SMI from hosting the series, aiming 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 their own lucrative media rights negotiations and a source of market confusion.

Another significant piece of evidence presented was a text exchange from February 1, 2023, between Phelps and O’Donnell, which read:

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 suggested legal involvement, O’Donnell reiterated, "I thought it looked more and more like NASCAR." He maintained that his intention was merely for legal counsel to "take a look at it," rather than to actively shut down SRX.

Regarding the addition of North Wilkesboro and Bowman Gray to the Cup Series schedule, Kessler framed these moves as anti-competitive. O’Donnell defended the decisions by highlighting the long-standing relationship between NASCAR and the promotional families associated with these tracks, dating back decades. He stated that the owners of Bowman Gray wished to sell their lease, and NASCAR, with its deep historical ties to weekly racing at the track, was a natural successor. He also noted that SMI approached NASCAR with a request for a Cup race at the owned North Wilkesboro Speedway, which NASCAR granted. Kessler pressed the point, however, that these decisions to bring the Cup Series to these venues occurred subsequent to the internal discussions about SRX’s perceived threat.

The Superstar Racing Experience ultimately announced its closure in January 2024, with the precise reasons for its cessation remaining undisclosed. O’Donnell conceded in his testimony that the possibility of a breakaway series is a constant consideration, forming part of his professional responsibility to identify and mitigate adverse business risks for NASCAR.

The trial also delved into the intricate negotiations surrounding the charter agreements. In March 2022, during an early meeting with team owners to discuss the impending charter negotiations, O’Donnell took extensive notes, one of which explicitly stated that the current model was "broken" for competitors. He documented the precarious financial situation of teams, noting that they could be "one lost sponsors away from going out of business." His notes further indicated that a team’s operational cost could reach "$20 million per entry per season." O’Donnell acknowledged that NASCAR was aware of the industry’s financial challenges. At the time, the charter agreement stipulated a distribution of broadcast rights revenue: 65% to tracks, 25% to teams, and 10% to NASCAR.

During that same meeting, Curtis Polk, an investor in 23XI and eventual chairman of the Teams Negotiating Committee, outlined three primary goals for the teams: maximizing broadcast rights revenue, increasing competition, and implementing a spending salary cap. Jeff Gordon of Hendrick Motorsports reportedly inquired if the France family, NASCAR’s ownership, was "open to a new financial model" to support the teams. Ben Kennedy, a descendant of NASCAR founder Bill France, indicated that the family was indeed open to such discussions. However, when questioned by Kessler, O’Donnell stated this was "No."

Further evidence of O’Donnell’s attempts to foster change emerged through a handwritten note from February 14, 2023, where he expressed hope for a "younger" future leadership within NASCAR’s board, citing the "legacy mindset" as an impediment to growth. He indicated that he had tried to make headway for the teams, even in conversations with Jim France, but that 21 out of 22 key issues in the charter negotiations remained unresolved in NASCAR’s favor. Kessler suggested that Jim France acted as a "brick wall in the negotiations," a characterization O’Donnell declined to adopt, stating, "Those are your words, not mine."

Despite the contentious nature of the negotiations, O’Donnell maintained that his primary objective is to "grow the sport," which encompasses benefiting team owners and fans, even if it means disagreeing with his superiors. He asserted that the France family hired him with the understanding that he would not be a "yes man" and would address broader issues within the sport.

The trial also presented a counterpoint to the teams’ financial struggles by highlighting NASCAR’s own significant investments and losses. O’Donnell testified that the three-year endeavor of racing in downtown Chicago incurred a cost of $55 million for NASCAR, a strategic investment made to secure Amazon as a broadcast partner. Similarly, NASCAR reported a $6 million loss for the Mexico City race this year, which was undertaken due to its importance to Amazon, who contributed an additional $1 million to the race purse. When pressed on the specifics of the Mexico City loss, O’Donnell could only attribute the majority of the deficit to "logistics."

The morning of the fourth day began with the cross-examination of Bob Jenkins, co-owner of Front Row Motorsports. NASCAR attorneys attempted to demonstrate that Jenkins had misrepresented FRM’s financials by using figures from his other businesses. While Jenkins testified that Cup Series car costs were around $20 million per season, NASCAR counsel Lawrence Buterman presented discovery documents indicating FRM’s highest expenditure on a Cup car was $14 million. Jenkins clarified that the $20 million figure represented an aggregate cost across multiple teams, and his ability to operate at a lower cost was a competitive advantage. Buterman also pointed to documents showing Jenkins included a $1.2 million loss from his unrelated Truck Series team in his damage claims, which Jenkins conceded was an error.

A key argument from the plaintiffs is that NASCAR’s "take it or leave it" final charter offer on September 6, 2024, was indicative of a monopsonist acting anti-competitively. However, Buterman presented evidence of Jenkins employing a similar tactic in 2021 with Denny Hamlin regarding a proposed merger between their teams. Jenkins’ text message to Hamlin, stating, "we can’t keep negotiating this forever…why we decided we had to have a deal by 5 p.m.," was used to draw parallels. Jenkins countered this analogy, arguing that Hamlin had options to purchase charters from other struggling teams, unlike the limited choices teams had with NASCAR’s charter system.

The pace of the trial itself became a point of discussion, with Judge Kenneth D. Bell expressing concern about the slow progression and limited number of witnesses. He urged attorneys to be more direct and avoid excessive questioning or evasion, stating, "There are uncomfortable texts and emails for both sides, so just acknowledge it as a bad look and get on with it." Bell warned that he would intervene if the redundancy continued, likening the jury’s experience to "seeing a lot of trees and not a lot of forest."

The trial’s timeline also came under pressure. NASCAR’s intended witness, Roger Penske, was only available on Monday, potentially extending the trial into a third week. While NASCAR requested to have Penske testify out of order, Kessler objected, citing the disruption to his intended narrative. Judge Bell sided with Kessler, emphasizing the importance of maintaining the trial’s structure and avoiding undue burden on the jury, especially as the holiday season approaches. Bell’s remarks suggested that extending the trial by 50% would be "unacceptable" and could lead to significant juror dissatisfaction.

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