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NASCAR antitrust lawsuit: Judge orders 12 teams to disclose some financial records
Twelve of NASCAR's teams will only have to disclose their financial records in a limited scope to the league, a federal judge ruled Wednesday, the latest development in an ongoing lawsuit between NASCAR and two other teams.
The 12 teams appeared in federal court on Tuesday to argue against being required to fully disclose their financial records to NASCAR. They expressed reservations about whether the sensitive nature of their financials would remain private. If it were leaked, they argued, it could potentially disrupt the competition within the sport to 'catastrophic' levels.
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The hearing was part of the joint antitrust lawsuit filed by 23XI Racing, which is co-owned by NBA legend Michael Jordan and Joe Gibbs Racing driver Denny Hamlin, and Front Row Motorsports against NASCAR and its CEO and chairman, Jim France, alleging monopolistic practices. The lawsuit, filed last October, came after 23XI and Front Row decided not to sign an extension to the charter agreement that guarantees teams certain revenues and a starting spot in all 36 Cup points races.
In the lawsuit, the teams argued that the sport's current economic model makes it difficult for even the most successful teams to break even. NASCAR was seeking 11 years of records with the intent of learning what revenue teams generate, how much they spend to compete at the highest level of stock car racing, and what their profit margins are. If U.S. District Court judge Kenneth D. Bell had ruled in NASCAR's favor, they would've had access to every financial detail related to operating a NASCAR team across all divisions, including salaries for drivers and other team personnel, how much a team spends on research and development, and what each specifically earns from corporate sponsorship and from manufacturers.
Adam Ross, an attorney who argued on behalf of the 12 teams, referred to NASCAR's request as a 'fishing expedition.'
'It would be absolutely devastating to these race teams if their competitors were able to find out sponsorships on the cars, driver salaries and all revenue streams,' Ross said. 'It cannot make its way into the public realm.'
NASCAR countered that it would use an outside accounting firm to review the information in addition to listing teams anonymously and redacting sponsor names.
Judge Bell agreed with the teams, and while the 12 teams will have to disclose some of their records, it will be done in a more restrictive manner — only 'annual top-line financial data (total revenue, total costs, and net profits/losses) on an anonymized, average per-car basis for each year dating back to 2014.' One team, Kaulig Racing, has already submitted its financials to NASCAR.
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Of the 15 teams that hold charters — valued in the mid-eight figures — only 23XI and Front Row chose not to sign the charter agreement that resulted from drawn-out and contentious negotiations spanning two years.
At the end of the nearly two-hour-long hearing on Tuesday, Bell, just as he did the week prior, expressed disbelief that the two sides are on course for what could be a potentially seismic showdown in federal court that carries serious ramifications. The trial is scheduled to begin Dec. 1.
'I am amazed at the effort going into burning this house down over everybody's heads,' Bell said. 'But, I'm the fire marshal, and I will be here in December if need be.'
Last week, Bell urged both sides to find middle ground and settle. Hamlin said Saturday that no progress had been made toward a settlement.
'We did not want to entertain any of that until we went through full discovery,' Hamlin said at Pocono Raceway, site of last week's NASCAR race.
Mediation is scheduled to begin in August.
(Top photo of 23XI Racing's No. 23 car: Jeff Robinson/Icon Sportswire via Getty Images)
