23XI statement on not signing Charter agreement

Conover said:
Hey retired here also. Not taking anything personal. Just a very lifelong dedicated nascar racing fan going back to my first Winston cup races attended as a kid at Hickory Motor Speedway. Seen a lot over those years in this sport. Covered it as a broadcaster for a time long ago. Friends with and grew up with the Jarrett family. Perhaps my take is more NASCAR centered, as they are the organization that built the sport, invested heavily in it, had good times and bad times, still make mistakes, but ultimately provide the basis for these teams to compete, employing thousands of people and make drivers and owners very wealthy.

I also understand business very well, having run an organization that generates annual revenue of $65M. My understanding is that NASCAR negotiated with the teams for 2 years trying to find a common ground acceptable to the France family. All teams ultimately signed the deal except two. “But they had a gun to their head!” folks say.

Nope, and here’s why. Clearly during this year, Jordan, Hamcrap and Jenkins had many opportunities to convince the other owners to JOIN THEM in their preplanned lawsuit. Had even HALF of the teams not signed in order to join the suit, it would have pushed a very unique response, perhaps even a dilemma, relative to next season. But, the teams did NOT choose to join it. No gun to the head.
Click to expand...
I am more skeptical of Nascar but still the same that's an incredible post and I appreciate you. I wasn't as involved with it as much but I grew up watching drivers like Jack Ingram and Butch Lindley and feel so fortunate for what I saw, it was an incredible time.

I can't articulate it with any justice but listening to MRN on Sundays just felt so soothing, it felt like home.

My hope is that some settlement will occour that everybody eventually agrees to sign.
 
StandOnIt said:
If it is so unfair how come nobody else is involved.
Click to expand...
If the mob extorts protection money from 15 businesses and only two file police complaints, was it fair? If one kid throws a spitball and teacher makes everyone stay after school, was it fair?

Note that I am NOT passing judgement on NASCAR's actions in this post. My point is that 'fair' isn't determined by how many people comply or complain.
 
Charlie Spencer said:
If the mob extorts protection money from 15 businesses and only two file police complaints, was it fair? If one kid throws a spitball and teacher makes everyone stay after school, was it fair?

Note that I am NOT passing judgement on NASCAR's actions in this post. My point is that 'fair' isn't determined by how many people comply or complain.
Click to expand...
We'll see about that if other team owners are star witnesses for Nascar and they are able to help prove that their relation with Nascar is contractual. I imagine there is going to be quite a fight in that area between what are independent contractors and antitrust perpetrator.
 
Conover said:
Show me where NASCAR stated specifically that charters were designed to provide owners with a tangible asset of value when they were introduced? Haven’t seen it and I doubt you will find it. The intent of charters was to guarantee a team’s participation in every race, with set funding they could count on, AND thereby enable them to guarantee sponsors availability over a guaranteed number of races. Nothing more. As this was a valuable part of participating in the sport, teams wanting to enter sought to aquire the rights from existing teams, leading to a market for those rights. The ownership of the participation slot was always kept by NASCAR. If a new team wanted to “buy” a charter, they were actually paying for a subleasing agreement, not a tangible asset with deed or title. NASCAR was still the arbiter of approval for a transfer of charter rights.

Now a court may rule that this process is somehow wrong, but it is a business practice conducted in other ways beyond a sports league.
Click to expand...
They didn't need charters to guarantee starting spots. The various NASCAR car owner plans accomplished that in the short term and easily could have been modified to accomplish it for a much longer term. The same goes for the payouts. The reason the RTA was pushing for charters was EXACTLY to give owners a tangible asset, regardless of what NASCAR wanted. The fact that NASCAR implemented the charter system is tacit approval of that concept in my opinion, and they were only too happy to go with it while it suited their desires. Now that it gotten in their way, they have had a sudden change of tune. The car owners are not virgins by any measure, but NASCAR is being completely unreasonable on the permanence of the charters.
 
aunty dive said:
“The preliminary hearing for the injunction request is slated for Nov. 4. The teams are also seeking expedited discovery to pore through the documents of France, Phelps, NASCAR Executive Vice Chairperson Lesa France Kennedy, COO Steve O’Donnell, Executive Vice President Ben Kennedy and Senior Vice President Scott Prime.”

www.sportsbusinessjournal.com

Antitrust lawyer shares his take on lawsuit as NASCAR gets ready to play defense on charters

The racing industry continues to digest the move by 23XI Racing and Front Row Motorsports to file an antitrust lawsuit against NASCAR, a case that could have a seismic impact if it isn’t quickly dismissed. With the negative publicly brought by the lawsuit, industry stakeholders were split last...
www.sportsbusinessjournal.com www.sportsbusinessjournal.com
Click to expand...
The attorney quoted acknowledges he only looked at the complaint filing, which ‘is only one side of the story”. Both of his quick takes (teams squeezed financially and high entry barriers to participation) don’t include any supporting context. Neither generalized conditions alone or together scream antitrust violations. I also get the sense he knows nothing about the sport or motor racing leagues in general. But…it’s some kindling to add to the author’s article.
 
From the above article. While some are convinced of the 13 who have signed the contract have no merit. Here is an example of a lawyer who reviewed the case saying he thinks Michael Jordan would have "Gravitas"

he told Sports Business Journal it appears the teams have a serious case, and that the presence of Jordan could lend gravitas to it not only in the court of public opinion, but even in the court of law.
 
Formerjackman said:
They didn't need charters to guarantee starting spots. The various NASCAR car owner plans accomplished that in the short term and easily could have been modified to accomplish it for a much longer term. The same goes for the payouts. The reason the RTA was pushing for charters was EXACTLY to give owners a tangible asset, regardless of what NASCAR wanted. The fact that NASCAR implemented the charter system is tacit approval of that concept in my opinion, and they were only too happy to go with it while it suited their desires. Now that it gotten in their way, they have had a sudden change of tune. The car owners are not virgins by any measure, but NASCAR is being completely unreasonable on the permanence of the charters.
Click to expand...
I could see where NASCAR might have seen some eventual ‘return’ on participation might be realized via charters, but it would never be an ROI, since the teams never invested a nickel for them. NASCAR granted those with conditions. It is similar to a rental verses selling a property. Over time the renters started selling their rental rights (call it subletting) for large sums. NASCAR felt it wasn’t a good system so they decided to remove the rental agreement, thereby rendering no value to the sale of the rights to the property. After negotiation, NASCAR’s final offer was to phase out the charter system over a 7 year span. It still gives teams the potential to sell rental rights, but now there is an expiration date. The value of these just decreased and will steadily decrease over that time.

Now, in my opinion, if the court believes charters should somehow be owned by teams, like franchises in the NFL, then NASCAR should have the right to charge a market rate fee for those to be purchased. Doesn’t matter that newer teams paid big money for theirs…they bought rights to the rental as it was never their property. The argument that NASCAR never needed charters reinforces the fact that NASCAR never relinquished these as assets or property to the teams who had them. Charters came with requirements, responsibilities and performance minimums. If they were not met, NASCAR took them away. It was never property of the teams.
 
Conover said:
I could see where NASCAR might have seen some eventual ‘return’ on participation might be realized via charters, but it would never be an ROI, since the teams never invested a nickel for them. NASCAR granted those with conditions. It is similar to a rental verses selling a property. Over time the renters started selling their rental rights (call it subletting) for large sums. NASCAR felt it wasn’t a good system so they decided to remove the rental agreement, thereby rendering no value to the sale of the rights to the property. After negotiation, NASCAR’s final offer was to phase out the charter system over a 7 year span. It still gives teams the potential to sell rental rights, but now there is an expiration date. The value of these just decreased and will steadily decrease over that time.

Now, in my opinion, if the court believes charters should somehow be owned by teams, like franchises in the NFL, then NASCAR should have the right to charge a market rate fee for those to be purchased. Doesn’t matter that newer teams paid big money for theirs…they bought rights to the rental as it was never their property. The argument that NASCAR never needed charters reinforces the fact that NASCAR never relinquished these as assets or property to the teams who had them. Charters came with requirements, responsibilities and performance minimums. If they were not met, NASCAR took them away. It was never property of the teams.
Click to expand...
I think one of the main reasons Nascar wanted to hold on to the rights of the charters is to avoid what exactly is happening now.
 
Conover said:
The attorney quoted acknowledges he only looked at the complaint filing, which ‘is only one side of the story”. Both of his quick takes (teams squeezed financially and high entry barriers to participation) don’t include any supporting context. Neither generalized conditions alone or together scream antitrust violations. I also get the sense he knows nothing about the sport or motor racing leagues in general. But…it’s some kindling to add to the author’s article.
Click to expand...
I posted that in order to highlight the date of the injunction hearing.

I agree that in spite of his education and experience, his commentary is anecdotal.
 
Conover said:
it would never be an ROI, since the teams never invested a nickel for them.
Click to expand...
The original charter holders didn't spend money. For the teams that purchased charters from the original or subsequent owners, there was certainly nickels invested.
Conover said:
It is similar to a rental verses selling a property. Over time the renters started selling their rental rights (call it subletting) for large sums.
Click to expand...
If I sublet a property, I still own it, can claim it as an asset, and can terminate the lease as specified in the contract. With charters, those were sales, nothing less. Once complete, the former owners had no claim to them and receive no additional income from them.
 
Formerjackman said:
The reason the RTA was pushing for charters was EXACTLY to give owners a tangible asset, regardless of what NASCAR wanted. The fact that NASCAR implemented the charter system is tacit approval of that concept in my opinion, and they were only too happy to go with it while it suited their desires. Now that it gotten in their way, they have had a sudden change of tune. The car owners are not virgins by any measure, but NASCAR is being completely unreasonable on the permanence of the charters.
Click to expand...
After the system was implemented, the term “enterprise value” was used across NASCAR media to describe an asset that now existed and belonged to the teams in addition to the piles of hardware listed on their balance sheets.

I wonder why NASCAR didn’t squelch that reporting in the moment?

And … I wonder why NASCAR wanted to include verbiage in the new agreement intended to cause some cash to flow through to the sanctioning body every time a charter transfer / sale occurred? To now deny that these bits of paper were ever intended to be anything more than guaranteed grid spots and a promise to pay their holders more than the have-nots were going to get for the same finishing position is disingenuous at best.

I’ll be very surprised if Kessler’s injunction application is rejected by the court.
 
I've read every post in this 32-page discussion, and I still can't get over the amount of disdain many of y'all have for the economic plight of the team owners. These are the guys that make the show happen every week, so be careful who you neglect. Add me to the apparent minority of R-F members who feel the owners have had the short end of the stick in recent decades... ever since the deluge of corporate sponsorship declined to a mere trickle nearly 20 years ago... a time frame that coincided with a rapid ramp-up of expensive (but crucial) aerodynamics and other technology.

This double whammy squeeze play was presided over by the France family, whose motto probably was something like... "We the Nascar overlords absolutely, positively refuse to participate in the downturn. We leave that to the Racers who are ruled by sporting passion rather than economic greed."

I don't pretend to know antitrust law. I'll leave that to the many presumptive experts in this thread, who have expressed many legal opinions on the merits of the lawsuit. I know it's complicated and not always intuitive. It's not pure and unfettered capitalism, I know that much. There are rules and laws to foster healthy competition.

One fact has always resonated with me: when a race track has a Nascar date complete with TV money... that is a gold mine. The published financial statements of Dover Motorsports made that clear. Also, the efforts of Pocono to keep two dates. And most crucially, the strategies used by Nascar and SMI to diversify the schedule, renting tracks from third parties such as COTA and Road America to keep the media rights money firmly in the coffers of the France and Smith families. Clearly, the race tracks are not suffering from the revenue-and-cost squeeze the way the owners are suffering. The owners deserve a better deal, a better business model... that's my bias and opinion on this topic. I've said it and posted it here many times over the last 10-12 years.

I don't think Jim France recognizes and appreciates that the greatest risk to his empire is the uncertainty of long-term supply of top quality team owners who are ready, willing, and able to put on the weekly show. Most of the existing owners are well advanced in age. Personally, I think Brian France recognized the ownership business model needed improvements in order to attract the next generation of top flight owners. This is why the 2015 Charter Agreement came to fruition. I don't think Jim France appreciates that some third-rate Xfinity team cannot replace Rick or Roger or Preacher Joe.
 
LewTheShoe said:
I've read every post in this 32-page discussion, and I still can't get over the amount of disdain many of y'all have for the economic plight of the team owners. These are the guys that make the show happen every week, so be careful who you neglect. Add me to the apparent minority of R-F members who feel the owners have had the short end of the stick in recent decades... ever since the deluge of corporate sponsorship declined to a mere trickle nearly 20 years ago... a time frame that coincided with a rapid ramp-up of expensive (but crucial) aerodynamics and other technology.

This double whammy squeeze play was presided over by the France family, whose motto probably was something like... "We the Nascar overlords absolutely, positively refuse to participate in the downturn. We leave that to the Racers who are ruled by sporting passion rather than economic greed."

I don't pretend to know antitrust law. I'll leave that to the many presumptive experts in this thread, who have expressed many legal opinions on the merits of the lawsuit. I know it's complicated and not always intuitive. It's not pure and unfettered capitalism, I know that much. There are rules and laws to foster healthy competition.

One fact has always resonated with me: when a race track has a Nascar date complete with TV money... that is a gold mine. The published financial statements of Dover Motorsports made that clear. Also, the efforts of Pocono to keep two dates. And most crucially, the strategies used by Nascar and SMI to diversify the schedule, renting tracks from third parties such as COTA and Road America to keep the media rights money firmly in the coffers of the France and Smith families. Clearly, the race tracks are not suffering from the revenue-and-cost squeeze the way the owners are suffering. The owners deserve a better deal, a better business model... that's my bias and opinion on this topic. I've said it and posted it here many times over the last 10-12 years.

I don't think Jim France recognizes and appreciates that the greatest risk to his empire is the uncertainty of long-term supply of top quality team owners who are ready, willing, and able to put on the weekly show. Most of the existing owners are well advanced in age. Personally, I think Brian France recognized the ownership business model needed improvements in order to attract the next generation of top flight owners. This is why the 2015 Charter Agreement came to fruition. I don't think Jim France appreciates that some third-rate Xfinity team cannot replace Rick or Roger or Preacher Joe.
Click to expand...
Nailed it. Very well said.
 
LewTheShoe said:
I've read every post in this 32-page discussion, and I still can't get over the amount of disdain many of y'all have for the economic plight of the team owners. These are the guys that make the show happen every week, so be careful who you neglect. Add me to the apparent minority of R-F members who feel the owners have had the short end of the stick in recent decades... ever since the deluge of corporate sponsorship declined to a mere trickle nearly 20 years ago... a time frame that coincided with a rapid ramp-up of expensive (but crucial) aerodynamics and other technology.

This double whammy squeeze play was presided over by the France family, whose motto probably was something like... "We the Nascar overlords absolutely, positively refuse to participate in the downturn. We leave that to the Racers who are ruled by sporting passion rather than economic greed."

I don't pretend to know antitrust law. I'll leave that to the many presumptive experts in this thread, who have expressed many legal opinions on the merits of the lawsuit. I know it's complicated and not always intuitive. It's not pure and unfettered capitalism, I know that much. There are rules and laws to foster healthy competition.

One fact has always resonated with me: when a race track has a Nascar date complete with TV money... that is a gold mine. The published financial statements of Dover Motorsports made that clear. Also, the efforts of Pocono to keep two dates. And most crucially, the strategies used by Nascar and SMI to diversify the schedule, renting tracks from third parties such as COTA and Road America to keep the media rights money firmly in the coffers of the France and Smith families. Clearly, the race tracks are not suffering from the revenue-and-cost squeeze the way the owners are suffering. The owners deserve a better deal, a better business model... that's my bias and opinion on this topic. I've said it and posted it here many times over the last 10-12 years.

I don't think Jim France recognizes and appreciates that the greatest risk to his empire is the uncertainty of long-term supply of top quality team owners who are ready, willing, and able to put on the weekly show. Most of the existing owners are well advanced in age. Personally, I think Brian France recognized the ownership business model needed improvements in order to attract the next generation of top flight owners. This is why the 2015 Charter Agreement came to fruition. I don't think Jim France appreciates that some third-rate Xfinity team cannot replace Rick or Roger or Preacher Joe.
Click to expand...

The track ownership model and the fact that NASCAR restricts what owners can do with the car (can’t test, race elsewhere…etc) are the weakest points for NASCAR. I think NASCAR is 100% an illegal monopoly that exercises undue influence in the field.

The problem for Denny and MJ however is that the majority of owners don’t seem to care. If the RTA was actually serious, they could have threatened to boycott the 2025 season unless they got an equitable deal. Now 23XI set off a nuclear bomb that may land with a judge deciding how to split up NASCAR.

If the RTA was a worth of a damn, this would have never ended up in the courts. I’m not comfortable with the idea of a court getting to decide the future of the sport. This could have easily been settled if the RTA actually used their leverage effectively. NASCAR would have folded like an accordion because without the teams, they have nothing.
 
The Nature Boy said:
The track ownership model and the fact that NASCAR restricts what owners can do with the car (can’t test, race elsewhere…etc) are the weakest points for NASCAR. I think NASCAR is 100% an illegal monopoly that exercises undue influence in the field.

The problem for Denny and MJ however is that the majority of owners don’t seem to care. If the RTA was actually serious, they could have threatened to boycott the 2025 season unless they got an equitable deal. Now 23XI set off a nuclear bomb that may land with a judge deciding how to split up NASCAR.

If the RTA was a worth of a damn, this would have never ended up in the courts. I’m not comfortable with the idea of a court getting to decide the future of the sport. This could have easily been settled if the RTA actually used their leverage effectively. NASCAR would have folded like an accordion because without the teams, they have nothing.
Click to expand...
NASCAR cut the RTA's sack off year or so ago when they quit negotiating with them. Decided to separate everyone from the herd. It worked.
 
StandOnIt said:
That is a matter of opinion. If it is so unfair how come nobody else is involved. Could be even more of a factor if other owners who have signed are called in to testify about certain points.
Click to expand...

This. Doesn't. Matter. Have antitrust laws been broken, or not?

Fairness and the number of teams not involved has nothing to do with the actual case. Unless you're suggesting that the lack of involvement is proof of a law not being broken. Which it isn't.
 
StandOnIt said:
Anti trust are what the two outliers are saying. Nascar is saying that isn't antitrust, it is a contract dispute. So not only do they have to try to get their charters back but they have to prove it is an anti trust case. Both are going to take a ruling before they can proceed, one at a time. This is going to take awhile.
Click to expand...

No. The "two outliers" are suing for breaking antitrust laws. NASCAR is saying that they aren't breaking any antitrust laws and are claiming that the two race teams are only accusing them of this to use as negotiation tactics. That doesn't even matter. Because they're accused of breaking antitrust laws. The court is going to decide if that's the case. NASCAR claiming "this isn't antitrust, they're just negotiating and extorting us" is not relevant to the outcome of this case.

The court decides if NASCAR has broken the law.

There's no information out there, no facts out there that suggest NASCAR has or hasnt broken the law. There's nothing. What Nascar says doesn't matter. What the teams say don't matter.


It's straightforward. Did NASCAR break antitrust laws? We have no way of knowing
 
No doubt all of us are speculating and making projections based on what we think we see. My opinion is just that; conjecture related to business practices, the small amount of corporate law I’m familiar with, and some decent knowledge of the sport. I have no beef with the owners (although I admit I can’t stand Hambone, but I’ve always been straight up about that). Maybe they do deserve more share of the pot. But, let me be very clear in what I am saying.

The race teams are in incorporated. They allocate their revenue across many things. They pay drivers handsomely, pay team and admin personnel according to market rates, and pay themselves whatever they choose. They build race shops, buy equipment, everything needed to run the business. When they say they aren’t making a profit, it’s not that they aren’t making money. Far from it. They write off the investment into facilities, equipment, computers, everything relative to tax law. Depreciation schedules for capital expenditures are followed. All the talent and employee pay comes off the top line. Their own compensation also is deducted. If they aren’t reporting any profit, that lessens the taxes paid against such profit for the corporation. Now, maybe the owners aren’t paying themselves much, but I doubt it. Look at their homes and how they live. I have no issue with that whatsoever.

Point is they want the charter to be like a franchise asset similar to the NFL, NBA, etc. That would be the most valuable asset they own. Race shops and building have value, but not as much as those charters could. Jordan sold his shares of ownership in the Hornets franchise for a huge profit from when he bought it.

Should NASCAR establish teams with “franchise” rights? Maybe, but IT IS NOT AS STRAIGHTFORWARD AS THE NBA OR NFL. Those teams have to provide a league acceptable facility to play in. That cost is significant. NASCAR has tracks and track owners that provide those venues. Those don’t come cheap. Should NASCAR own their own tracks? Maybe not, but if those tracks aren’t maintaining the standards desired by NASCAR, and nobody is jumping forward to build new ones, what was the alternative?

Just a lot of things to consider by the judge relative to the merits of the lawsuit. It’s not the NBA. It’s not guys getting drafted or signed to contracts putting on a team uniform. They drive very complex racing equipment, whose engineering and construction must be highly regulated to achieve the desired competitive parity of all parties involved.

Will the judge understand the apples and oranges differences relative to the sport dynamics? Will NASCAR be found to have “loaded the dice” against the teams or alternative racing series (the rough definition of antitrust)? Stay tuned….
 
The Nature Boy said:
RTA cut their own sack off by not sticking together as a unit. They had leverage, they could have forced NASCAR to negotiate.
Click to expand...
The RTA's leverage disappeared when NASCAR quit talking to them. Period. NASCAR Intentionally divided the teams. Intentionally negotiated with one a a time to NASCAR's benefit. That is my understanding of WHY they sued.

Do NBA teams OWN their home stadium or does the local government? Is that facility used only on nights for home games or are other activities allowed during the week/off weeks? Activities that produce revenue. Who gets that revenue? Team or???

NASCAR teams pay for cars/parts that can ONLY be used on NASCAR affiliated tracks. Seems there is some doubt, after paying for those cars/parts, teams don't actually own them. What?

Whole thing stinks to the high heavens. I'm 100% on teams side.
 
KTMLew01 said:
NASCAR teams pay for cars/parts that can ONLY be used on NASCAR affiliated tracks. Seems there is some doubt, after paying for those cars/parts, teams don't actually own them. What?

Whole thing stinks to the high heavens. I'm 100% on teams side.
Click to expand...

Nascar made this common car with all parts from 3rd party vendor in conjunction with and at the request of the team owners themselves. "Save us from ourselves "

You can't have it both ways.

My main argument is that nascar is not forcing teams to spend $20 mil a year on race cars. They're doing that on their own. IMO if the team owners want to make more money they need to turn to themselves and agree to a spending cap.

Sent from my SM-G991U using Tapatalk
 
The Nature Boy said:
RTA cut their own sack off by not sticking together as a unit. They had leverage, they could have forced NASCAR to negotiate.
Click to expand...
Who is the RTA but the owners I believe. The RTA/owners negotiated for two years with Nascar about the contract. According to them, some of their issues they got and some they didn't. Good negotiations many times leaves both parties not getting everything they want.
But noted...A couple of them took their marbles and went home, the rest stayed to play.
 
wi_racefan said:
Nascar made this common car with all parts from 3rd party vendor in conjunction with and at the request of the team owners themselves. "Save us from ourselves "

You can't have it both ways.

My main argument is that nascar is not forcing teams to spend $20 mil a year on race cars. They're doing that on their own. IMO if the team owners want to make more money they need to turn to themselves and agree to a spending cap.

Sent from my SM-G991U using Tapatalk
Click to expand...
yeah, and let's not forget the engine rules. That is a huge cost saver. The fat cats ran a new engine every race before.
Nascar developed that car. That is just like an OEM car. You can't call it something different and go race it somewhere else.
I don't know how much the teams were involved in designing the car but I do know that certain teams are involved in making parts for the car.
 
StandOnIt said:
Who is the RTA but the owners I believe. The RTA/owners negotiated for two years with Nascar about the contract. According to them, some of their issues they got and some they didn't. Good negotiations many times leaves both parties not getting everything they want.
But noted...A couple of them took their marbles and went home, the rest stayed to play.
Click to expand...
www.raceteamalliance.com

Race Team Alliance

www.raceteamalliance.com www.raceteamalliance.com
 
StandOnIt said:
They said a couple of years ago it cost 16 million to run for a year.
Click to expand...
I’m sure it does. Transporting cars, travel expense, hotels and meals for at track personnel. Rental cars, etc., etc.

Race tires at $25 K per week… hospitality, etc…. I could go on. None of it has anything to do with spending $20 million “on race cars”.
 
You must log in or register to reply here.
Back
Top Bottom