On the third day of the 23XI Racing and Entrance Row Motorsports v NASCAR antitrust trial, testimony was concluded from Government Vice President and Chief Technique Officer Scott Prime and commenced for FRM crew proprietor Bob Jenkins.
Prime spent the second half of Tuesday on the stand, examined by 23XI and FRM lawyer Jeffrey Kesseler after which cross-examined by a pleasant lawyer earlier than being reexamined by Kessler.
First a recap of Prime’s testimony from Tuesday is within the hyperlink under.
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On Wednesday, Kessler continued his examination of Prime and their trade was sometimes contentious, with the lawyer even apologizing to Prime and the courtroom for elevating his voice.
“It’s okay — I perceive there are passions,” Prime stated in response.
Kessler’s preliminary line of inquiries to open the morning surrounded the goodwill provision, which is mainly the clause within the constitution settlement that forestalls crew homeowners from competing in one other competitor sequence or proudly owning one with out NASCAR approval.
Kessler: “Why not name it what it truly is?”Prime: “I am not a lawyer.”Kessler: “It ought to be known as anti-competitive will.”
This received an objection from the NASCAR bench and Kessler moved on.
Particularly, anybody who has a ten % possession stake in a crew is topic to the goodwill provision. Additional, if a crew proprietor or partial crew proprietor decides to go away the Cup Collection, that particular person should wait 12 months earlier than proudly owning a automotive in a distinct sequence or possession in a distinct sequence.
Kessler: “And also you assume that is goodwill?”Prime: “I do.”
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Then consideration was turned to the NextGen automotive, with Kessler searching for to color its mental property restrictions as a instrument utilized to restrain commerce and forestall competitors — one of many pillars of the lawsuit.
In beforehand found paperwork, Prime had expressed concern that the earlier era of automotive, recognized inside the group as Gen-6, had an ‘elevated threat to NASCAR of copycat sequence’ because of looser Mental Property restrictions.
In different phrases, NASCAR was involved that groups might search to race their vehicles in non – NASCAR sequence or race vehicles just like these used within the Cup Collection. When requested about it, Prime stated that was by no means a degree of competition.
“It was by no means a difficulty with the groups,” Prime stated. “They understood the Subsequent Gen automotive design and all of the protections that went with it, sure.”
Kessler: “Did groups vote … had been they requested in the event that they needed restrictions?”Prime: ‘My understanding is that there was by no means a difficulty with the groups…’ and that they needed protections and a level of value containment. ‘They understood the NextGen’s protections and endorsed it.’
Kessler identified that the groups haven’t got a proper vote underneath constitution guidelines.
The groups needed 4 issues earlier than that time — 1) 45 % of business income, 2) not having to pay into the Driver Ambassador Program, 3) 30 % of latest income the place crew IP was leveraged and everlasting charters.
That wasn’t agreed upon and Prime, by the found paperwork, was involved that the groups would look to affix or in any other case create a ‘breakaway sequence’ after which contemplated choices that included the next:
Scale back charters to 32 and provide them ‘first come first serve’ amongst the preexisting 36, which Kessler likened to musical chairs, and was a tactic to create shortage and competitors. Another choice was a tough deadline, which is kind of what occurred on September 6, 2024. One other thought was Challenge Gold Codes, the place NASCAR would take the game vertical, and runs races impartial of groups and hires drivers and fields vehicles themselves.
That’s detailed on the hyperlink under.
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Kessler stated that was an instance of what inspired the lawsuit.
“Solely a monopolist might say this,” Kessler stated. “Solely a monopolist has the ability to say, ‘Take my provide and for those who don’t take it, you’ll not be on this enterprise, and another person will take your home.’”
Regardless of the deadline passing, NASCAR didn’t enter into an settlement with any new crew homeowners for the 2025 season.
Prime’s place was that NASCAR simply wanted to have contingency plans within the case the groups former their very own breakaway sequence.
Kessler requested the place they’d race since NASCAR’s monitor exclusivity clauses stop such a division from racing on Cup Collection caliber services.
Prime stated there have been loads of tracks, citing brief tracks and avenue programs. He stated that NASCAR didn’t begin with superspeedways. Kessler stated this isn’t 1948. And regardless, Kessler stated it wasn’t life like to count on a possible competitor to simply race on avenue programs since NASCAR misplaced $50 million over three years in Downtown Chicago.
Prime stated messages of ‘locking up tracks’ had nothing to do with a breakaway sequence however was simply part of a multi-year settlement to schedule races. The instance he gave was that TNT needed Atlanta on their slate as a result of it was in Turner Sports activities’ again yard.
Kessler stated that did not require the brand new exclusivity clause constructed into it for a number of years.
Kessler: “Has any monitor requested you to be excluded from some other occasions that might make them cash?Prime: “I’ve by no means thought-about the query.”
The Amanda Chart
Kessler turned his consideration again to a subject from the day earlier than, The Amanda (Oliver) Chart, which mirrored a sequence of twenty-two asks made by the race groups and confirmed solely a single ‘win’ for the groups as they negotiated with NASCAR.
Oliver is NASCAR’s chief authorized officer and the topic of a Might 20-21 textual content thread between Prime, O’Donnell and Phelps confirmed that the senior management disagreed to some extent with how CEO Jim France was posturing his strategy.
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O’Donnell: Lesa known as. “Spoke to Gary (Crotty, NASCAR authorized), Mike (Helton, president emeritus) and Jim (France). All of them thought assembly was productive and that we simply must hold making an attempt to maneuver the needle. Groups will not get all the pieces they need and hopefully we will simply meet within the center. I simply listened as she did not need to hear any opinions however I after all did not maintain again. I simply requested for somebody within the mtg to level out how any of our positions are going to develop the game and place us for a giant rights renewal sooner or later.
Phelps: Productive? Madness. Have a look at the Amanda (Oliver, Chief Authorized Officer) chart – zero wins for the groups.
Phelps: The draft should mirror a center place of we’re useless within the water – they may signal them however we’re fucked shifting ahead. I really feel higher now. Thanks for that.
Prime: The strategy of ‘right here is a little more cash, fuck off in every single place else’ is a daring technique
O’Donnell: And one which Lesa stated each Mike and Gary thought is getting us shut. Near a cushty 1996, fuck the groups, dictatorship, motorsport, redneck, southern, tiny sport.
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Regardless of one of the best efforts for the leaders to influence France and the NASCAR board, the groups got a tough deadline of September 6 on September 6 to signal an extension settlement that carried solely that single win to the groups. They had been instructed to signal it inside an hour, though NASCAR did ultimately relent and gave the groups till midnight that day to signal it.
Prime known as it a ‘gun to the pinnacle’ provide and Kessler seized on that second within the questioning.
Kessler: “Gun to the pinnacle. Isn’t that what Jim needed?”Prime: “I don’t know what Jim needed.”
13 of the 15 groups that compete within the Cup Collection signed by midnight, however 23XI and Entrance Row didn’t, and ultimately issued this lawsuit towards NASCAR.
For his half, Prime did say in a Might 20 textual content message to Phelps that he actually did attempt to get groups everlasting charters when he met with the Board of Administrators.
Prime: “No bueno with Jim on Charters. Can say OD and I put our greatest foot ahead however it was a brick wall. Ben (Kennedy) did not converse up in any respect, Gary simply rolled over on all the pieces.Phelps: “I heard from steve. I am sorry to listen to this – tremendous disappointing. I will converse with Lesa at 1:30.
However Prime stated repeatedly over the previous two days that NASCAR by no means thought-about taking charters away groups, which is true to some extent, as a result of two deadlines handed and no charters had been issued to different events.
However Kessler needed to know what would occur if 23XI and Entrance Row, or some other crew, finally didn’t signal earlier than the 2025 season.
“There was a deadline.”
What would occur in the event that they didn’t signal?
“There wanted to be a deadline set so NASCAR might put together for 2025.”
Kessler stated ‘you stated gun to the pinnacle and that’s what occurred proper?’
‘There was a deadline.’
Kessler once more requested what would occur?
“The constitution settlement would expire.”
So what would occur?
“Their phrases would not be legitimate.”
He let it go, however his level was made, that NASCAR would certainly take the constitution away at a sure level … as a result of they aren’t evergreen.
Bob Jenkins testifies
Bob Jenkins is the social gathering to this lawsuit that garners the least quantity of consideration in comparison with Denny Hamlin and Michael Jordan however he took heart stage for testimony and partial cross examination within the second half of Wednesday.
There, Jenkins stated he loses $6.8 million per yr and has by no means turned a revenue underneath the race crew banner and doesn’t draw wage for his possession of the crew both. Beneath cross-examination, Jenkins stated he solely attends a dozen races a yr and goes to the store 6-7 instances a yr.
He says he spends $4.7 million a yr on automotive parts now underneath the NextGen mannequin the place he spent $1.8 million earlier than underneath the earlier era of automotive.
Particularly, he cited that when the NextGen got here out groups had been allowed to restore the components and items themselves and now the components need to be despatched again to the NASCAR-mandated vendor to restore.
Jenkins stated it prices him $30,000 per week to get an undamaged automotive refurbished. So why does he do it?
“That seems like one thing my spouse would say,” Jenkins stated. “I simply consider in it. It’s why I really feel so strongly about altering this technique. There are 150 staff at that race store who consider in me to make this work.”
The second the aforementioned ‘take it or go away it’ provide got here in on September 6 of final yr, he was at dinner together with his dad and mom, having no thought this was coming. He didn’t even have cell service.
When he left the restaurant, he says he had dozens of texts and cellphone calls.
“There was numerous ardour, numerous emotion, particularly from Joe Gibbs, he felt like he needed to signal it,” Jenkins stated. “Joe Gibbs felt like he let me down by signing. Not a single proprietor stated, ‘I used to be comfortable to signal it.’ Not a single one.”
Jenkins known as the ultimate settlement ‘backwards’ in some some ways.
“It was insulting, it went up to now backward,” Jenkins stated. “NASCAR needed to run the governance with an iron fist, it was like taxation with out illustration. NASCAR has the fitting to do no matter it needs.”
Jenkins testified to that whereas additionally saying that constitution system, which was first launched in 2016 was conceptually sound, however simply wanted refinement that didn’t finally include the 2025 doc.
And that’s to say nothing of the well-documented course of that led as much as the 13 groups signing it however two others that sued NASCAR as a substitute.
“If we ever do get this proper, NASCAR groups shall be worthwhile.”
“This isn’t about bashing the France household. They’ve made numerous nice selections. This constitution will not be one among them.”
“I believe it was a step ahead however it wasn’t truthful.”
Throughout his cross-examination, Jenkins obtained the identical line of questioning from NASCAR lawyer Lawrence Buterman that Denny Hamlin obtained on Tuesday. How might he sue NASCAR for putting non-compete clauses of their schedule and constitution contracts whereas inserting non-compete clauses in his driver contracts.
Like Hamlin, Jenkins stated it’s as a result of he’s not a monopoly and that drivers have choices for the place to signal.
Buterman questioned Jenkins’ claims of losses and accused him of hiding earnings by his different corporations. For instance, Jenkins has continuously provided potential sponsors or pay drivers the prospect to donate to the Lakeway Christian Colleges he based as a substitute.
Matt Tifft paid $2.6 million to race for Entrance Row in 2020 however was given that very same choice and would have paid $500,000 to the college earlier than a well being challenge ended that season prematurely. Chandler Smith paid $1.5 million this yr to race for FRM’s Truck Collection crew.
Jenkins testified that, regardless of the choice, no sponsor or driver has donated to Lakeway.
Buterman, like he did with Hamlin, then requested why Entrance Row solely pays its drivers 8.5 % of crew income whereas claiming that NASCAR underpaid groups at 25 % of Sanctioning Physique income.
He repeatedly known as it ‘apples and oranges’ since groups incur bigger bills just like the $350,000 NextGen.
“A basketball doesn’t value $350,000,” Jenkins stated. “You don’t wreck a $350,000 basketball.”
Buterman questioned the losses Jenkins stated he incurred regardless of selecting to run Lengthy John Silvers on vehicles that didn’t have sponsorship for 5 races. Lengthy John Silvers is a franchise he owned and gave to his 4 sons.
The NASCAR lawyer stated Jenkins selected to run that automotive unsponsored versus taking much less.
Jenkins stated the sponsorship prices what it prices, and he couldn’t promote these 5 races for much less, after which flip round to Love’s and justify making them spend extra. It will unravel his complete enterprise.
Buterman stated Entrance Row is simply asking NASCAR for more cash to compensate for a enterprise that was dropping cash even earlier than the constitution system was instituted.
He stated that Jenkins was an advocate for smaller subject, and eliminating open entries simply to present his crew a bigger cut up of the NASCAR pie, to which Jenkins stated a extra unique entry level raises the worth of everybody contained in the system.
Jenkins additionally stated that open groups are typically slower field-filler that ‘don’t add worth’ to the sequence excluding the Daytona 500.
His cross examination will proceed on Thursday.
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