CHARLOTTE, N.C. — Attorneys for 12 of NASCAR’s 15 race teams argued in federal court Tuesday that disclosing their financial records to the stock car series would be “catastrophic” to competitive balance and warned that making such details public would put them all in danger.
The hearing was over a discovery dispute between NASCAR and the teams that are not parties in the ongoing antitrust suit filed by 23XI Racing, which is owned by retired NBA Hall of Famer Michael Jordan and three-time Daytona 500 winner Denny Hamlin, and Front Row Motorsports, owned by entrepreneur Bob Jenkins.
23XI and Front Row are the only two organizations out of the 15 that refused last September to sign take-it-or-leave offers on a new charter agreement. Charters are NASCAR’s version of a franchise model, with each charter guaranteeing entry to the lucrative Cup Series races and a stable revenue stream. Of the 13 teams that signed, only Kaulig Racing has submitted the financial documents NASCAR subpoenaed as part of discovery.
The other 12 organizations are fighting against releasing the information to NASCAR and even argued that NASCAR asking for them violates the charter agreement, which claims all disputes must go to arbitration.
U.S. District Judge Kenneth Bell of the Western District of North Carolina promised a quick ruling but, just like last week, seemed exasperated at the lengths being taken in this brawl that for now is heading toward a December trial.
“I am amazed at the effort going into burning this house down over everybody’s heads,” Bell said at the end of the nearly two-hour hearing. “But I’m the fire marshal and I will be here in December if need be.”
Attorneys for the teams say their financial records are private and there is no guarantee the information won’t be leaked; in a hearing last week, information learned in discovery was disclosed in open court.
“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,” attorney Adam Ross said. “It cannot make its way into the public realm.”
Ross said NASCAR has asked for 11 years of records and communications — including what Hendrick Motorsports spent on both its Garage 56 project building a car to race at the 24 Hours of Le Mans and the cost of Kyle Larson running both the Indianapolis 500 and the Coca-Cola 600 the last two seasons.
“NASCAR has gone a step too far,” Ross said.
NASCAR argued it needs the financials to understand profit margins and whether teams are actually unable to make ends meet under the charter agreement. NASCAR vowed to redact details to conceal team identities, a suggestion that was met with skepticism from team attorneys who contended it would be easy to connect the dots and, for example, figure out which contracts belong to, say, Team Penske.
Attorneys also argued that money is not often distributed equally across the board with each team. For example, Team Penske might use an engineer for a NASCAR team, an IndyCar team and a sports car team.
Bell asked NASCAR why it would not be satisfied with just “topline” numbers.
“Why is not enough to know it costs X to run a car?” Bell asked.
Attorneys for the 12 teams also noted that their clients are extremely uncomfortable to be dragged into the suit.
“This is the opposite of what they want — all the teams are torn to pieces that NASCAR wants them to disclose this information and they don’t want to upset NASCAR,” Ross said.
Teams have long argued that NASCAR is not financially viable and they needed multiple concessions, including a greater revenue stream and a more permanent length on the charter agreements. Those presently have expiration dates and can be revoked by NASCAR. Two years of negotiations ended last fall with 13 teams signing on but 23IX and FRM instead heading to court.
The hearing came one day after Bell declined to dismiss the teams’ request to toss out NASCAR’s countersuit, which accuses Jordan business manager Curtis Polk of using “cartel”-type tactics in the most recent round of charter negotiations.
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