In a timeline the place the events concerned within the 23XI Racing and Entrance Row Motorsports v NASCAR trial couldn’t agree on something to the purpose they’ve ended up in courtroom, it’s no shock that they might have a look at the identical monetary information and find yourself with two completely different interpretations.
That’s the key takeaway from a lot of Wednesday, which is formally Day 8, of the trial that can decide if NASCAR used its monopsony standing to financially drawback groups that compete within the Cup Sequence and hurt competitors on the entire.
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As a reminder, this case is not about whether or not or not NASCAR is a monopoly, which by itself just isn’t unlawful. As an alternative, the Western District of North Carolina has already decided that NASCAR is a monopsony, the one purchaser of the product that’s premier Inventory Automotive racing groups.
The jury should decide if NASCAR used that market energy to hurt competitors and the earnings of groups by the constitution system.
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NASCAR Chief Monetary Officer Greg Motto was on the witness stand for simply in need of two hours the place he spent more often than not discussing the $400 million in distribution to the France household belief.
First, perceive that for tax functions, NASCAR is structured as a personal S Company that means that its revenue, losses, deductions and credit are handed to the shareholders. The shareholders, on this case, are all France-Kennedy members of the family.
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Jeffrey Kessler, the lead lawyer for 23XI and FRM, made the argument that NASCAR may have afforded $720 million a yr in constitution funds to the groups as an alternative of the $431 million distributed in 2025. Motto, along with a monetary skilled (Mark Zmijewski) mentioned that may have bankrupted NASCAR, in distinction to arguments made by group monetary skilled Dr. Edward Snyder.
Kessler has made an analogous argument from the beginning of the trial that every one the testimony from NASCAR executives and their specialists’ math embody everybody retaining the identical wage and the enterprise being run precisely because it was final yr.
As an alternative, Kessler has repeatedly pointed to what occurred in 2020 when COVID-19 pressured NASCAR to situation wage cuts for everybody from the highest to the underside till the pandemic subsided.
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Kessler mentioned in a world wherein the groups had been paid what they felt they had been entitled to if not for anticompetitive conduct, Jim France down to trace upkeep would have additionally skilled comparable shifts of their compensation.
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Kessler mentioned that NASCAR promoting a majority of the land that when housed Auto Membership Speedway for $544 million may have gone to paying the groups as an alternative of paying down debt from the Worldwide Speedway Company merger in 2019. He additionally mentioned that, as an S-Corp, NASCAR isn’t required to ship dividend funds to the France household.
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Motto says NASCAR has to pay its taxes, and meaning the France household, because the firm is an S-Corp. Kessler says promoting a NASCAR owned observe meant that its general fairness was improved because it now has much less debt.
Kessler mentioned NASCAR and the France household belief is simply transferring cash from one palm of the household hand to a different.
“You do no matter you’ll be able to to reduce the taxes to the France household,” Kessler mentioned to Motto below cross-examination.
Motto says NASCAR’s yr over yr income loss in 2025 was $10 million, which Kessler says was merely a ‘rounding error’ for an entity that measurement.
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Kessler additionally cross-examined Zmijewski, who prefers to go by Professor Z, and mentioned that the NASCAR monetary skilled didn’t correctly account for the Sanctioning Physique’s monetary information within the ‘however for world’ wherein groups had been more healthy as a result of they weren’t topic to anticompetitive hurt.
Once more, either side used the identical monetary information to achieve two completely different conclusions all through the day.
NASCAR begins protection
The primary seven and a half days of the trial featured 23XI and Entrance Row’s attorneys calling their witnesses, with NASCAR cross-examining them, after which passing the witness again for a re-examination.
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Beginning on Wednesday afternoon, the reverse course of occurred with NASCAR constructing its case by its chosen witnesses, which get passes back-and-forth by the identical course of.
The primary witness known as was John Probst, senior vice chairman of innovation and racing improvement for NASCAR, who spoke largely to the event of the NextGen automobile and the argument that groups having a ‘reckless’ spending drawback as beforehand articulated.
Probst began working for Ford Motor Firm out of faculty within the Mid-90s, which led him to competing within the CART Indy Automotive Sequence, after which NASCAR with Pink Bull Racing and Chip Ganassi Racing, earlier than transferring to the Sanctioning Physique in 2016.
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NASCAR wished to make use of Probst as an example what occurred with the American Open Wheel Cut up, as a motive to not have a competing collection, however these questions had been objected to by Choose Kenneth D. Bell and sustained.
In different phrases, the questions weren’t allowed to be answered.
“We’re getting a bit of bit out in left area,” Bell advised the protection.
Probst was allowed to supply a short summation of what occurred between CART and the Indy Racing League over the 90s.
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“(IRL) began racing on the Indianapolis 500, created their very own racing collection, began their very own groups to fill the grid, labored with the OEMs to start out extra groups and break up the collection aside.”
Probst was used as a conduit to clarify to the jury what a wind tunnel is, discussing the Laurel Hill Tunnel below a mountain owned by Ganassi, as an example simply how a lot cash groups spend to make use of such services.
1000’s of {dollars} an hour
Kessler objected to Probst occurring for practically 10 minutes concerning the historical past of wind tunnel testing and Choose Bell requested to maneuver the dialog alongside.
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“That is all very fascinating and we perceive your level however let’s transfer on,” Bell advised the NASCAR facet of the room.
Probst defined to the jury that the event of the NextGen automobile, a single-source elements provided spec automobile, was created across the philosophical concept that followers solely care about producer particular engines and our bodies.
The whole lot else, Probst argued, couldn’t be seen by followers and largely weren’t necessary to them. This could enable groups to spend significantly much less cash spending time in wind tunnels and engineering their very own elements and items.
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Probst mentioned the idea of the automobile was endorsed by 30 of the 36 constitution holders earlier than improvement formally started on its improvement. It’s a improvement, that Probst factors out, has price NASCAR $14 million and the groups nothing since they not R&D the automobile.
‘I assumed that was a reasonably compelling endorsement by the group proprietor council,’ Probst mentioned.
Probst testified that NASCAR is aware of how usually groups buy elements from the accredited distributors and so they ask for that information a few times a yr. They’re allowed to below the constitution settlement. They ask for this information as a result of they need to flip round and present groups that purchasing extra elements does not correlate to wins.
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He cited that Workforce Penske routinely wins probably the most races on the fewest re-purchasing of single supply provided elements. 23XI Racing has spent probably the most over the previous two years.
Probst defined to the jury that whereas some groups (like Entrance Row Motorsports in keeping with the testimony of proprietor Bob Jenkins final week) resent not being allowed to restore elements as a result of buying new ones repeatedly price extra, NASCAR does not enable it as a result of ‘restore’ to groups means ‘modify’ and ‘enhance.’
Permitting groups to restore elements, Probst testified, would open up a spending battle between groups and up-end the parity that was all the level of the seventh-generation platform.
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Underneath cross-examination by Kessler, Probst was advised ‘you might be conscious that my shoppers aren’t difficult the NextGen, proper’ however as an alternative sued NASCAR primarily based on the non-compete restrictions positioned within the constitution settlement.
Kessler requested Probst if he is aware of of any research that may assist stopping groups from utilizing Cup Sequence automobiles in different leagues as ‘pro-competitive’ and so they argued back-and-forth over legalese and the readability of the query.
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Why select growing a brand new automobile over that?
Kessler requested what NASCAR was afraid of.
“We do not concern competitors,” Probst responded.
Kessler then identified that NASCAR including exclusivity clauses got here in fast aftermath to the RTA growing a mid-week summer season filth collection and the arrival of the SRX collection.
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NASCAR’s authorized group objected to the assertion however Choose Bell allowed it.
Probst mentioned observe sanctioning agreements weren’t his division and couldn’t converse to the exclusivity agreements. As well as, he mentioned that NASCAR’s place of defending its model is frequent enterprise and in contrast the Sanctioning Physique to Coca-Cola.
He mentioned Coke wouldn’t develop a brand new recipe after which instantly enable Pepsi to repeat it. Probst additionally mentioned that no group ever requested NASCAR to make use of the Gen6 automobile in a non-NASCAR division nor the NextGen.
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“All they should do is ask,” Probst mentioned.
Kessler responded by saying there is no such thing as a method that NASCAR would enable groups to make use of the NextGen in a non NASCAR collection.
“We might focus on it,” Probst unhappy again.
Kessler then requested why NASCAR Commissioner Steve Phelps steered that ‘somebody must put a knife’ within the ‘trash’ SRX collection.
“I would assume Steve would reply that query,” Probst mentioned.
Kessler offered Probst an inner doc wherein NASCAR executives together with Probst, Phelps, Steve O’Donnell and Scott Prime had been tasked with discovering how a lot it might price to start out a Cup Sequence group from scratch.
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Probst mentioned groups mislead or don’t reply price questions precisely or evenly so NASCAR merely wished to have a greater thought of what the precise prices related to competitors had been.
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Kessler suggests it was an train to raised inform ‘Challenge Gold Codes,’ NASCAR’s choice to take the Cup Sequence ‘vertical’ and run a collection in-house if each group refused to signal the 2025 constitution extension.
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Probst says their causes to conduct the train had been altruistic and at face-value.
Probst, when requested about, says he didn’t solely writer the Gold Codes doc however contributed to it. He additionally conceded that he used information from the aforementioned examine in his contributions to the Gold Codes slide presentation.
Lastly, Kessler requested Probst a couple of textual content message dialog between he and his chief of employees, Tom Swindell the morning after NASCAR’s constitution extension deadline on September 6, 2024.
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Swindell mentioned ‘RIP Challenge Gold Codes,’ in a message to Probst, who replied ‘YES.’ Swindell mentioned this was ‘nice information’ and requested ‘what’s the leverage for (23XI, FRM in) holding out?’ Probst mentioned ‘I can not see any.’
Kessler was attempting as an example that Challenge Gold Codes was greater than only a contingency plan however a really actual consideration. Probst mentioned he and Swindell are private buddies and so they textual content about their buddies, hobbies, households and work.
“No additional questions, your honor,” Kessler mentioned upon ending cross-examination.
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France finally ends up
After a Tuesday session the place he was largely evasive, providing over a dozen ‘I have no idea’ or ‘I don’t remembers,’ France did reply a direct query over why he was not in favor of everlasting charters for Cup Sequence group homeowners.
“I don’t have a sightline to the long run, and I don’t really feel comfy making a promise I don’t know if I can maintain,” France mentioned.
On Tuesday, France was proven letters despatched to him by buddies Roger Penske, Rick Hendrick, Joe Gibbs and Jack Roush urging the NASCAR CEO to make their possession statuses ‘evergreen,’ which might develop the fairness of what would then be a franchise, whereas costing the Sanctioning Physique nothing.
“I don’t know how one can set something on this altering world we’re in as everlasting,” France mentioned. “I’m simply not comfy making agreements that go on perpetually.”
France mentioned NASCAR budged on quite a few factors, one thing an inner (Amanda Chart) graph disagrees with because it confirmed 21 wins or neutrals for NASCAR and one win for group, however France was not going to make charters everlasting.
What kind of certainty would he want?
“Don’t know ’til we get there,” France mentioned.
Earlier than dismissing the jury, Choose Bell advised them that they are going to be wanted subsequent week however that NASCAR has expressed to the courtroom its intent to conclude its case by 5:30 on Friday. The unique schedule was a 10-day trial over two weeks.
A sluggish begin pressured Bell to increase every day to an additional hour this week, and shutting arguments will come no before Monday morning now.
There was additionally the matter of the place NASCAR’s lawyer acquired the knowledge that Richard Childress explored promoting a portion of his Cup Sequence group to a bunch spearheaded by former driver Bobby Hillin Jr.
This was protected by a non-disclosure settlement and Childress was visibly agitated when NASCAR’s lawyer used it on him throughout cross-examination on Tuesday.
Additionally after the jury was dismissed on Wednesday, groups lawyer Danielle Williams says she had six questions on the matter. Choose did not need to hear them. Williams says NASCAR hasn’t even given their facet the paperwork but.
They need to know who NASCAR’s supply was who broke an NDA.
Bell mentioned each events wanted to work collectively to get an answer earlier than Thursday morning or he was going to situation an order ‘and I’ve an thought of what that’s going to be.’
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