23XI, Front Row make antitrust case with discovery documents

For the most part, every filing and counter-filing, reply and response regarding the 23XI Racing and Front Row Motorsports v. NASCAR lawsuit and countersuit espouses the same points and rebuttals.

At this point, both sides are either going to reach a settlement as a result of mediation that takes place in the same room on Tuesday with Judge Kenneth D. Bell or this dispute will go all the way to its scheduled trial date on December 1.

All of this is to say that much of what appeared on Wednesday in 23XI and Front Row’s response to NASCAR’s summary motion judgement is a rehash of arguments that were made before, in the same spirit that NASCAR is making and redressing the same fundamental claims as well.

Over the past calendar year, both parties have established their legal allegations and supported them with documents and communications, most of which were produced through discovery.

But for the sake of posterity, 23XI and Front Row once again responded with similar arguments over why Judge Bell should not issue summary judgement against them. A reminder -- summary judgement is a decision reached by the court purely on the merits of a dispute without a jury.

The judge has that option but has indicated to both parties that he is reluctant to issue such a ruling on any portion of the suit or lawsuit so as to not taint the potential jury come December.

Anyway, the teams made their case that 1) NASCAR has the market authority to impose below market value charter agreement terms because they (allegedly) act anticompetitively, 2) that there are no alternatives for Stock Car racing teams to compete within because the Sanctioning Body has agreements that prevent tracks from having similar events and 3) the NextGen car cannot be used anywhere else.

The opening line in the filing also doesn’t make it seem like 23XI and Front Row are interested in settling either.

“The motion is a meandering combination of mischaracterizations of Plaintiffs’ claims, misstatements of governing antitrust law, and disputed facts which must go to trial. Much of the motion appears to be written exclusively for the press, as counsel for NASCAR surely knows that the arguments they are presenting are not a basis for granting summary judgment. Stock car racing is a sport, but litigation is not. NASCAR’s tired retread of arguments this Court has repeatedly rejected should be disposed of quickly.”

Newly revealed texts

As part of the filing, the teams also produced text messages obtained via discovery between then NASCAR COO Steve O’Donnell, who is now the league president, and NASCAR’s Chief Racing Development Officer Ben Kennedy.

This is from a June 23, 2022 text exchange in response to seeing PGA Golf’s market coming under siege from LIV Golf.

O’Donnell:“I just watched Monahan's press conference. I don't ever want to see you in that position. We need to lock ourselves in a room and war game this thing. Future of sport is on the line and we need to assume-unfortunately- that 30 of 36 drivers will leave us and all owners will leave us. If that was the case-what would we do? If we don't want that to be the case-what should we do and what do we really think is fair? The Pga looks dumb right now. Equivalent would be if this happened to us and in one week you held a press conference and said-we have added five international races and will award the teams 80% of the purse going forward.

I believe we are exposed-a few possibilities: Private equity who does not care about a short term return Saudi or some other entity who doesn't care at all if business model even makes sense

Mid week series at short tracks run by teams-new cars

International business made by teams from November thru January that essentially takes our entire international future portfolio Private equity purchase of (Speedway Motorsports)

There is more. Bottom line-my eyes were opened with the pga and the teams. There is zero loyalty. We need to assume that nobody gives a shit- they don't.

So-I think next week you call an offsite with prime, Rich, Herbst, Clark, Probst. Whomever you trust the most. They talk about it they are fired.

Blank sheet of paper and we look at all possible scenarios. This is Chicago times 1,000. Think of all the time we have spent on Chicago or dodge for that matter. Neither matters if we don't get this right. Need a daily task force on this.

I know my job is to provide you with answers. Right now-I don't have the answer for where they will go but I am in the camp that they will destroy the business. If you are truly losing money and you are 75 years old-you don't care about long term. If you are Michael and Michael's lawyer we are just a game-you could care less about what happens. The drivers don't make enough to stay-if somebody came in and said-you are racing these srx cars at the following short tracks-we don't have a tv deal but we will guarantee you 10mil for the next five years-20 races-$1b. That is $3b less than what just happened with LIV. It is a real threat.

So-let's win this. Curtis thinks we are dumb hillbillies. He is lecturing us on how tv deals work. I want to win and I know you do as well. It is personal now-we are you against a guy who doesn't care one bit about this sport and he said it-let's do what we think is right for this sport to succeed in the future. Bill France always said that everybody needs to win. Curtis just thinks team should win.

What is the best concept for this business to thrive for next 15 years. What do you want your legacy to be? Let's win this and then go off into the sunset and have great stories to tell about how the perceived hillbillies outsmarted everybody and positioned the sport for the long term. Okay-goodnight.

Ben Kennedy:Just read the text and agreed 100% with everything you said (as Jeff Gordon would say).

In all seriousness think the offsite makes a ton of sense and to your point, scenario play out multiple cases from best case to worst case and have tabletop sessions for each. I feel like the other thing we should continue to think about is how we both protect ourselves from something like what is happening to the PGA now but also diversify our revenues. Right now we are so beholden to broadcast, but there is so much opportunity in international, sports betting, future NFTs and more. I think we all expect a huge increase in 2025, which is great but with the media world moving at a rapid pace what does that or sports consumption in general look like in 2035? No one has the answers but feels like we need someone constantly thinking about it.

Emails about the NextGen

To also illustrate their point about the locked intellectual property of the NextGen car, the teams also produced emails from O'Donnell to senior leadership about a decision to either make a NextGen or to turn the previous generation car into a more trimmed-down spec version.

From one email:

“We need to say: Going G6* will obsolete every car without the ability to introduce a "new car"....Gen7 does the same but at least you have a new look/technology and a longer runway to obsoletion/plan

“As long as teams continue to build their own individual parts, we will have issue

“Should we also say that just introduce CBF in 2020 vs any car change with a $12m cap”

And from another

“Jim France is very much in the move fast camp-ie 2020. As you will see from the deck Prime sends over, that does not equal a "next gen" car. We may ultimately be in too dire a situation with the teams to be able to wait and execute Gen 7 but still tbd

“Would like your thoughts on the deck and also any watch outs or input on direction, timing, brand implications, etc. All thoughts welcomed. Thanks”

They would be in ‘too dire a situation’ due to the impending negotiations over a charter extension agreement.

As the except from a NASCAR slide below shows, NASCAR wanted to own the car’s IP, which it now does.

“NASCAR would own this IP for eventual use across all series if desired with less risk of copycat series”

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