NASCAR Antitrust Trial: Denny Hamlin Excited to Testify
The federal antitrust trial against NASCAR opened on Monday, with three-time Daytona 500 winner Denny Hamlin visibly affected during his initial testimony. The high-profile case could reshape the structure of the prestigious racing series. Hamlin, co-owner of 23XI Racing along with Michael Jordan, and Front Row Motorsports, argue that NASCAR exerts monopolistic control, forcing teams to comply with rules and funding that they consider unfavorable. During his statement, Hamlin became emotional when recalling his beginnings in motorsports and family sacrifices. He revealed that his father’s health is delicate, which intensified his emotion when testifying. Hamlin recounted how, approaching his 20s, he faced the decision of whether to continue competing or join his father’s trailer business. Subsequently, after evaluating his future in the sport, he found an opportunity by partnering with Michael Jordan.Hamlin highlighted that thanks to Jordan’s presence, 23XI has been profitable in all but one of its five seasons. On the other hand, Hamlin’s lawyer, Jeffrey Kessler, pointed out that Bob Jenkins, owner of Front Row, has not managed to make a profit since 2004. In the center of the litigation is NASCAR’s revenue sharing model, which 23XI and Front Row consider unfair to the teams, who often operate at a loss. Hamlin testified that bringing a single car to the track during a 38-race season costs $20 million, not including overhead expenses such as the driver’s salary. Kessler mentioned a study commissioned by NASCAR that revealed that 75% of the teams lost money in 2024.If I can’t succeed with Michael as a partner, I knew this was never going to work.
Denny Hamlin
The franchise agreements signed for this year, which triggered the lawsuit, guarantee teams $12.5 million in annual revenue. NASCAR argues that this represents an increase from the $9 million of previous agreements, but Hamlin pointed out that 11 of the first 19 franchised teams are no longer in operation. The three franchises that 23XI acquired came from teams that ceased operations.
Hamlin stated that 23XI paid 4.7 million dollars for its first franchise, 13.5 million for the second, and 28 million for the third, acquired at the end of last year. The franchise system assures a car a place in each race, as well as a percentage of the prize money, and provides team owners with an asset to sell if they wish to leave the business. NASCAR’s lawyers argued that the franchise system has created $1.5 billion in capital for the 36 franchised teams. Before this system, teams raced “open,” with no guarantee of participating in the race or receiving payment. The case has gone through hearings and arguments for more than a year, despite calls from other NASCAR teams to reach an agreement. A victory for NASCAR could put 23XI, Front Row, and their combined six cars out of business. Their franchises, now in NASCAR’s possession, would likely be sold. The last franchise sold for $45 million, and NASCAR has indicated interest from potential buyers, including private equity firms. A victory for the teams could result in monetary damages and the possible dismantling of NASCAR as it is known today. The judge has the power to undo a monopoly, and nothing is ruled out, from ordering the sale of NASCAR to dismantling the franchise system. The franchise system, introduced in 2016, is NASCAR’s version of the franchise model used by most professional sports leagues. Teams have argued that the revenue model is not viable, even with franchises. They want more favorable conditions for franchises, including that they be permanent (currently they are renewable and revocable), a larger percentage of revenue, and a voice in governance. 23XI and Front Row also argue that NASCAR exerts absolute control over all aspects of the racing series and allege a monopoly based on exclusivity clauses, ownership of the majority of the race tracks on the Cup schedule, and its control over the rules and regulations. NASCAR claims it has not violated antitrust law because it has not restrained trade beyond normal business practices. NASCAR has also cited the option of cars participating in races as “open teams” and attempting to enter the competition in one of the four non-franchised speed slots in qualifying. The pre-trial discovery process revealed that NASCAR made over $100 million in 2024. The discovery phase was tough for both sides. Antitrust allegations have exposed offensive personal communications, NASCAR’s finances, and a deep disdain between some of the sport’s top executives and its participants. NASCAR commissioner Steve Phelps, among other leaders, in a discussion with other NASCAR executives, called Hall of Fame team owner Richard Childress a “dinosaur”, “idiot”, and “stupid redneck”. The discussion also included a reference to Childress “owes his entire fortune to NASCAR” and needed to “be taken out and whipped”. Another NASCAR executive alleged that the sport’s fans can’t read, and several series leaders admonished Tony Stewart’s SRX summer short track series and threatened to cancel it because NASCAR drivers were participating. On the other hand, it was discovered that the 23XI president had said that France had to die to obtain favorable franchise conditions, Hamlin admitted his aversion to the France family, one of Jordan’s advisors said that Hamlin was not a good businessman, and Jordan joked that he loses more money in a casino than he pays one of his drivers. 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 couldn’t be impartial because “I like Mike” and another who said he had Michael Jordan posters on his walls growing up. One juror said he was a North Carolina fan but noted that Jordan’s college football team isn’t “doing too well right now,” to which the star shook his head and laughed. Among the NASCAR executives in the courtroom were Chairman Jim France and Vice Chair Lisa France Kennedy, two descendants of the family that founded NASCAR in 1948 and still owns it.
