CHARLOTTE, N.C. (AP) — The commissioner of NASCAR testified Tuesday in Michael Jordan’s federal antitrust trial against the racing series to the frustrating two-plus years of negotiations on a new revenue sharing model with teams, noting that Jordan’s financial advisor would not compromise on key issues.
Steve Phelps, who was president of NASCAR during the negotiations, said Jordan right-hand man Curtis Polk was the lead representative for the teams and held firm in their demand for increased revenue, permanent charters, a voice in governance and 1/3 of any new revenue streams.
The deal finally presented to the teams in September 2024 did not include permanent charters or a voice in governance, but NASCAR gave the teams a firm deadline to accept its final offer or forfeit their charters. 23XI Racing, owned by Jordan, Polk and three-time Daytona 500 winner Denny Hamlin, and Front Row Motorsports, owned by Bob Jenkins, were the only two teams out of 15 organizations to refuse to sign and have instead sued.
The charter system was established in 2016 and is equivalent to the franchise model used in other sports. In NASCAR a charter guarantees cars a spot in the 40-car field each week, as well as specified financial terms.
Phelps, promoted to become NASCAR’s first commissioner earlier this year, testified on the seventh day of the trial that he worked very hard to get the teams the best deal possible. But he said the teams’ initial request for $720 million in revenue a year guaranteed to them would have put NASCAR out of business, and communications between NASCAR executives showed that the France family, which founded and owns the series, would not budge on permanent charters.
At the same time, Polk would not budge, either.
“It was one of the most challenging and longest negotiations I’ve ever been part of,” said Phelps, who admitted he didn’t particularly enjoy negotiating with Polk, who was at the time the representative for the “Team Negotiating Council.”
“The TNC never wavered off their four pillars. It was just the same thing, the same thing, and that was very frustrating.”
Phelps testified at one point NASCAR believed it had landed on a new charter agreement that satisfied the teams but it was contingent on NASCAR finalizing its new media rights deal.
“I thought we’d just plug in the numbers,” said Phelps, who testified NASCAR was hoping to land a media deal worth $1.2 billion. When it became clear the media rights deal wouldn’t net that much money, Phelps said the teams asked to set a floor in negotiations.
NASCAR ultimately got a media deal worth $1.05 billion — still an increase of $33 million a year from the previous deal — and Phelps said “every dollar” went to the race teams when it began this year.
However, the ultimate revenue payout to teams is $431 million annually, the charters are not permanent and the teams did not get a voice in rules and regulations.
Even so, Phelps testified he believed the charter agreement was “a fair deal.”
But, internal NASCAR communications again showed the Florida-based France family was a “brick wall” on the issue of permanent charters and executives found chairman Jim France’s stubbornness to be frustrating during negotiations.
Messages were shown in court in which Phelps and current NASCAR President Steve O’Donnell repeatedly lashed out at the lack of internal progress as they fought to get the teams the best deal possible.
Pace in the trial has picked up on the order of U.S. District Judge Kenneth Bell, who has grown weary that its taken the plaintiffs seven days of testimony and counting. The teams still plan to call Hall of Fame team owner Richard Childress and France before resting its case.
On Monday, an economist testified NASCAR owes the two teams $364.7 million in damages based on a complex formula he used.
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, continued testimony to open Tuesday and the defense got him to admit he’s being paid somewhere close to $2 million for his work on the case.
Based on Snyder’s calculations, he determined NASCAR shorted 36 chartered teams $1.06 billion from 2021-24.
NASCAR contends Snyder’s estimations are wrong and its own two experts “take serious issue” with the findings. Defense attorney Lawrence Buterman asked Snyder his opinion on NASCAR’s upcoming expert witnesses and Snyder said they were two of the best economists in the world.
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