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12/01 17:10 CST Denny Hamlin breaks down in tears as the first witness
testifying at NASCAR antitrust trial
Denny Hamlin breaks down in tears as the first witness testifying at NASCAR
antitrust trial
By JENNA FRYER
AP Auto Racing Writer
CHARLOTTE, N.C. (AP) --- The landmark federal antitrust trial against NASCAR
opened Monday with three-time Daytona 500 winner Denny Hamlin breaking down in
tears minutes into his testimony as the first witness in a case that could
upend the venerable stock car series.
Hamlin's 23XI Racing, which he co-owns with Michael Jordan, and Front Row
Motorsports claim the series is a monopolistic bully that leaves its teams no
option but to comply with rules and financing they don't agree with.
As Jordan watched from the gallery, Hamlin began to cry and had to stop and
compose himself when asked how he got into racing. He disclosed to The
Associated Press last month that his father is dying, and he said on the stand
he was emotional because his dad "is not in great health."
"We got to when I was about 20 and a decision had to be made, I could keep
racing or go out and work for my dad's trailer business," Hamlin testified,
adding that he later was thinking about what retirement looked like and found a
team going out of business. He needed a partner and turned to Jordan, who he
had developed a friendship with when the Basketball Hall of Famer owned the
Charlotte Hornets and Hamlin was a season-ticket holder.
"If I can't be successful with Michael as a partner, I knew this was never
going to work," he said.
The references to his early days in auto racing and the sacrifices his family
made were intended to show how difficult it is for both team owners and drivers
to make it at the top level of the sport. He said he never would have been able
to start 23XI in 2021 had he not partnered with Jordan.
Because of Jordan's presence with the team, Hamlin testified, 23XI has turned a
profit in all but one of its five seasons of operation. His attorney, Jeffrey
Kessler, said in his opening statement that fast-food restaurant entrepreneur
Bob Jenkins has never turned a profit since starting his Front Row team in 2004.
Front Row won the 2021 Daytona 500. At the heart of the lawsuit is NASCAR's
revenue sharing model, which 23XI and Front Row argue is unfair to race teams
that often operate at a loss. Hamlin testified it cost $20 million to bring a
single car to the track over a 38-race season, not including overhead expenses
such as driver salary.
Kessler said a NASCAR-commissioned study found that 75% of teams lost money in
2024.
"So, why would these people do this if you are just going to lose money because
NASCAR isn't giving you a fair deal?" Kessler said as Jordan watched from th
gallery. "Because you love stock car racing, and there's nowhere else to do it."
The charter agreements signed for this year that triggered the lawsuit
guarantee the teams $12.5 million in annual revenue. NASCAR argues the
guaranteed payouts are an increase from $9 million from previous agreements,
but Hamlin noted that 11 of the first 19 chartered teams are no longer in
business. All three charters 23XI purchased came from teams that ceased
operations.
Hamlin said 23XI paid $4.7 million for its first charter, $13.5 million for its
second and $28 million for its third, acquired late last year.
The charter system guarantees a car a spot in the field each race week as well
as a percentage of the purse and gives team owners an asset to sell should they
want to get out of the business.
NASCAR attorneys argued that the charter system has created $1.5 billion in
equity for the 36 chartered teams. Prior to the charter system, teams raced
"open," with no guarantee they'd make the field or earn a payout.
The case has churned through hearings and arguments for more than a year
despite calls from other NASCAR teams to settle. U.S. District Judge Kenneth
Bell even helped mediate a failed two-day summit in October.
A NASCAR victory could put 23XI, Front Row and their six combined cars out of
business. Their charters --- now being held by NASCAR --- would likely be sold.
The last charter went for $45 million, and NASCAR has indicated there is
interest from potential buyers including private equity firms.
A win for the teams could lead to monetary damages and the potential demolition
of NASCAR as it is run today. The judge has the power to unravel a monopoly,
and nothing is off the table, from ordering a sale of NASCAR to the dismantling
of the charter system.
The allegations The charter system introduced in 2016 is NASCAR's version of the franchise model used by most professional sports leagues. Even with the charters, teams have argued that the revenue model is not viable. They wanted more favorable terms for the charters, including having them made permanent (they are renewable and revocable), a larger percentage of revenues and a voice in governance. 23XI and Front Row also argue NASCAR has a vice grip on all aspects of the racing series and allege a monopoly based on exclusivity clauses, ownership of most of the race tracks on the Cup Series schedule and its control of the rules and regulations. The two were the only teams out of 15 to not sign the charter extension a year ago and instead went to court. NASCAR says it has not violated antitrust law because it has done nothing to restrain trade beyond normal business practices. NASCAR has also cited the option for cars to enter races as "open teams" and try to make the field in one of four nonchartered spots on qualifying speed. 23XI and Front Row raced this season as open teams, and while their combined six cars made every race, it cost the organizations millions in purse money. The pretrial discovery process revealed NASCAR made more than $100 million in 2024.
Behind-the-scenes drama The discovery phase was brutal for both sides. The antitrust allegations have exposed salacious personal communications, NASCAR's finances and a deep contempt between some of the top executives in the sport and its participants. NASCAR Commissioner Steve Phelps was among leadership who in a discussion with other NASCAR executives called Hall of Fame team owner Richard Childress a "dinosaur," an "idiot" and a "stupid redneck." The discussion also included a reference that Childress "owes his entire fortune to NASCAR" and needed "to be taken out back and flogged." Another NASCAR executive alleged that fans of the sport can't read, and multiple series leaders admonished Hall of Fame driver Tony Stewart's summer short-track series, SRX, and threatened to have it the killed because NASCAR drivers were participating. On the other side, the president of 23XI was found to have said France had to die in order to receive favorable charter terms, Hamlin admitted his dislike for the France family, one of Jordan's advisers said Hamlin wasn't a good businessman and Jordan joked that he loses more money in a casino than he pays one of his drivers.
Jordan's presence factors into the trial Jordan's presence in the courtroom gallery near Hamlin was a factor: Among those dismissed from serving on the jury was a man who said he can't be impartial because "I like Mike" and another who said he had Michael Jordan posters on his walls growing up. A juror said they were a North Carolina fan but noted the football team at Jordan's alma mater is not "doing too well right now" to which the star shook his head and laughed. NASCAR executives in the courtroom included chairman Jim France and vice chair Lisa France Kennedy, two scions of the family that founded NASCAR in 1948 and still owns it. ___ AP auto racing: https://apnews.com/hub/auto-racing
The allegations The charter system introduced in 2016 is NASCAR's version of the franchise model used by most professional sports leagues. Even with the charters, teams have argued that the revenue model is not viable. They wanted more favorable terms for the charters, including having them made permanent (they are renewable and revocable), a larger percentage of revenues and a voice in governance. 23XI and Front Row also argue NASCAR has a vice grip on all aspects of the racing series and allege a monopoly based on exclusivity clauses, ownership of most of the race tracks on the Cup Series schedule and its control of the rules and regulations. The two were the only teams out of 15 to not sign the charter extension a year ago and instead went to court. NASCAR says it has not violated antitrust law because it has done nothing to restrain trade beyond normal business practices. NASCAR has also cited the option for cars to enter races as "open teams" and try to make the field in one of four nonchartered spots on qualifying speed. 23XI and Front Row raced this season as open teams, and while their combined six cars made every race, it cost the organizations millions in purse money. The pretrial discovery process revealed NASCAR made more than $100 million in 2024.
Behind-the-scenes drama The discovery phase was brutal for both sides. The antitrust allegations have exposed salacious personal communications, NASCAR's finances and a deep contempt between some of the top executives in the sport and its participants. NASCAR Commissioner Steve Phelps was among leadership who in a discussion with other NASCAR executives called Hall of Fame team owner Richard Childress a "dinosaur," an "idiot" and a "stupid redneck." The discussion also included a reference that Childress "owes his entire fortune to NASCAR" and needed "to be taken out back and flogged." Another NASCAR executive alleged that fans of the sport can't read, and multiple series leaders admonished Hall of Fame driver Tony Stewart's summer short-track series, SRX, and threatened to have it the killed because NASCAR drivers were participating. On the other side, the president of 23XI was found to have said France had to die in order to receive favorable charter terms, Hamlin admitted his dislike for the France family, one of Jordan's advisers said Hamlin wasn't a good businessman and Jordan joked that he loses more money in a casino than he pays one of his drivers.
Jordan's presence factors into the trial Jordan's presence in the courtroom gallery near Hamlin was a factor: Among those dismissed from serving on the jury was a man who said he can't be impartial because "I like Mike" and another who said he had Michael Jordan posters on his walls growing up. A juror said they were a North Carolina fan but noted the football team at Jordan's alma mater is not "doing too well right now" to which the star shook his head and laughed. NASCAR executives in the courtroom included chairman Jim France and vice chair Lisa France Kennedy, two scions of the family that founded NASCAR in 1948 and still owns it. ___ AP auto racing: https://apnews.com/hub/auto-racing
