Nascar ‘likely paid out millions’ in legal case with 23XI Racing and Front Row

• 23XI and FRM had sought US$365m in damages
• Lawyer fees for both sides could have totalled between US$50m and US$100m

Nascar likely paid out millions of dollars in damages to end its legal dispute with 23XI Racing and Front Row Motorsports (FRM), according to Sports Business Journal (SBJ).

In early December, the long-running legal feud between the sanctioning body and the two teams concluded, with Nascar agreeing to grant the teams permanent charters as part of the settlement.

While the financial terms were not disclosed, 23XI and FRM were seeking US$365 million in damages had the case gone to trial.

SBJ cited two antitrust experts who estimated between them that Nascar ultimately paid between ten and 50 per cent of that figure. This would place the settlement value in a range of approximately US$36.5 million to US$182.5 million.

Both sides are also believed to have incurred substantial legal costs. The experts estimated combined legal fees of at least US$50 million, potentially rising to nearly double that amount.

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While one expert spoke to SBJ anonymously, the other – Meegan Hollywood, an antitrust litigator at the Shinder Cantor Lerner (SCL) law firm – said that a billion-dollar damage fee is “bet-the-company or bet-the-sports-franchise type of money, so it’s potential for a huge financial loss if the jury finds that way and it’s tripled, so there’s that risk”.

In relation to the evergreen charters agreed in the settlement, Hollywood added: “I suspect also that this particular settlement allowed them to have a little bit more control in the changes that they made to the charter system because, in addition to the sort of financial risk, Nascar did run the risk of having court-mandated changes and then they sort of would have had to do that not on their own terms. This probably allowed them to make certain changes on their own terms and have some more internal control.”

A key moment in the build-up to the court case saw judge Kenneth Bell rule that Nascar was a monopsony, something which gave the plaintiffs an advantage, according to Hollywood.

“It seems to me that stock car racing would be its own market,” she said. “I get what [Nascar was] saying in terms of it competing with Formula One, but I do think there are a lot of differences there as well.

“There could be some overlap with sponsors, but also not, and overlap with audience, but also not, or sort of where you’re competing for media rights is different – so there are some nuances there where I think probably the judge got it right.”

In terms of futureproofing itself against further action, Hollywood said Nascar will now likely be talking to lawyers to adjust its contracts and rules to avoid any additional lawsuits, such as altering the non-compete clauses it has with its tracks.