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12/08 16:44 CST Economist says NASCAR owes $364.7M to teams in antitrust case
Economist says NASCAR owes $364.7M to teams in antitrust case
By JENNA FRYER
AP Auto Racing Writer
CHARLOTTE, N.C. (AP) --- An economist testified in Michael Jordan's federal
antitrust trial against NASCAR that the racing series owes a combined $364.7
million in damages to the two teams suing it over a revenue-sharing dispute.
Edward Snyder, a professor of economics who worked in the antitrust division of
the Department of Justice and has testified in more than 30 cases, including
"Deflategate" involving the NFL's New England Patriots, testified on Monday. He
gave three specific reasons NASCAR is a monopoly participating in
anti-competitive business practices.
Using a complex formula applied to profits, a reduction in market revenue, and
lost revenue to 23XI Racing and Front Row Motorsports from 2021-25, Snyder came
up with his amount of damages owed. Snyder applied a 45% of revenue sharing he
alleged Formula 1 gives to its teams in his calculations; Snyder found that
NASCAR's revenue-sharing model when its charter system began in 2016 gave only
25% to the teams.
The suit is about the 2025 charter agreement, which was presented to teams on a
Friday in September 2024 with a same-day deadline to sign the 112-page
document. The charter offer came after more than two years of bitter
negotiations between NASCAR and its teams, who have called the agreement "a
take-it-or-leave-it" ultimatum that they signed with "a gun to their head."
A charter is similar to the franchise model in other sports, but in NASCAR it
guarantees 36 teams spots in the 40-car field, as well as specific revenue.
Jordan and three-time Daytona 500 winner Denny Hamlin, along with Front Row
Racing, were the only two teams out of 15 to refuse the new charter agreements.
Snyder's evaluations found NASCAR was in fact violating antitrust laws because
the privately owned racing series controls all bargaining because "teams don't
have anywhere else to sell their services." Snyder said NASCAR controls "the
tracks, the teams and the cars."
Snyder repeatedly cited exclusivity agreements NASCAR entered into with
racetracks after the charter system began. The agreements prevent tracks that
host NASCAR from holding events with rival racing series. Prior to the
long-term agreements, NASCAR operated on one-year contracts with its host
racetracks.
The Florida-based France family founded NASCAR in 1948 and, along with Speedway
Motorsports, owns almost all the tracks on the top Cup Series schedule.
Snyder's belief is that NASCAR entered into exclusivity agreements with tracks
to stave off any threats of a breakaway startup series. In doing so, it
eliminated teams' ability to race stock cars anywhere else, forced them to
accept revenue-sharing agreements that are below market value, and damaged
their overall evaluations.
Snyder did his calculations for both teams based on each having two charters
--- each purchased a third charter in late 2024 --- and found 23XI is owed
$215.8 million while Front Row is owed $148.9 million. Based on his
calculations, Snyder determined NASCAR shorted 36 chartered teams $1.06 billion
from 2021-24.
Snyder noted NASCAR had $2.2 billion in assets, an equity value of $5 billion
and an investment-grade credit rating --- which Snyder believed positions the
France family to be able to pivot and adjust to any threats of a rival series
the way the PGA did in response to the LIV Golf league. The PGA, Snyder
testified, "got creative" in bringing in new revenue to pay to its golfers to
prevent their defections.
Snyder also testified NASCAR had $250 million in annual earnings from 2021-24
and the France family took $400 million in distributions during that period.
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AP auto racing: https://apnews.com/hub/auto-racing
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