Mammoth Blog

Whether premium stock-car racing can be considered a "market" when determining a monopoly and whether NASCAR works with sister company International Speedway Corp. to keep tracks such as Kentucky Speedway off the Sprint Cup schedule were the primary issues discussed Thursday morning during a hearing in the U.S. Court of Appeals for the Sixth Circuit.

The hearing was for the appeal of Kentucky Speedway's founders in an antitrust case filed in 2005 against NASCAR and ISC over NASCAR's decision not to grant the track a Sprint Cup event. In January 2008, U.S. District Court Judge William Bertelsman rejected the validity of the testimony from Kentucky Speedway's expert on what exactly is the market for the track and granted NASCAR's motion for summary judgment based on the fact that Kentucky Speedway didn't have grounds for a case.

Each side had 15 minutes during the hearing Thursday and the three-judge panel said it would take the case under advisement. Decisions typically come three weeks to six months after the hearing. If Kentucky Speedway founders win, the case would go back to U.S. District Court for trial. If NASCAR wins, the track founders could appeal to the U.S. Supreme Court. There also could be an appeal to the entire 24-judge panel in Cincinnati.

"(Kentucky Speedway) wanted the most premier product, the most scarce product. They didn't get it in five years, so they sued,' " argued attorney David Boies, who was representing NASCAR. "They didn't get it in eight years, so they sold. They wanted NASCAR to give them for free this very valuable right. ... They want one (Cup race). Everybody wants one. Everybody who has one wants two."

Kentucky Speedway opened in 2000 at a cost of $152 million. It has not obtained a Sprint Cup date and was sold to Speedway Motorsports Inc. in a $78.3 million deal in 2008. SMI plans to move a Cup date to the track, but NASCAR won't consider a realignment request until the antitrust litigation, brought by the founders, is resolved. SMI is considered a co-conspirator in the alleged conspiracy to keep independent tracks from getting Cup dates.

"(We were told) on the merits, we would have gotten a Cup race, but we weren't going to get a Cup race on merit alone," said attorney Rick Rule, who was arguing for the Kentucky Speedway founders. He also noted, "This is a classic version of anti-competitive, illegal conduct."

The founders seek in excess of $200 million in damages and are asking for the France family to sell off NASCAR and/or most of its tracks, and for new criteria to be created for awarding Sprint Cup race dates.

The basis of that claim is the relationship between NASCAR and ISC and the number of races controlled by ISC. According to court documents, NASCAR, the sport's sanctioning body, is owned privately by Jim France, the brother of the late Bill France Jr., and Lesa France Kennedy, daughter of Bill France Jr. and sister of NASCAR Chairman Brian France.

ISC is a publicly traded company, the majority of whose stock is owned by the France family. ISC has 19 of the 36 Sprint Cup events at its 12 tracks, while SMI has 12 races at seven tracks. The other five races are held at independent facilities.

The three France executives (Brian, Jim, Lesa), as well as NASCAR President Mike Helton and ISC President John Saunders, were all in attendance at the hearing.

Judge Ronald Lee Gilman, who noted the complexity of the case, asked the most questions from the three-judge panel. He asked Rule about the fact that other tracks don't have to sell to ISC or SMI and that NASCAR doesn't require tracks to have exclusive relationships. He asked whether the track founders believe NASCAR is trying to run Kentucky Speedway out of business.

Rule stressed that the issue before the judges is whether NASCAR has a monopoly because that is what Judge Bertelsman based his decision on. Bertelsman ruled that Kentucky Speedway's expert failed to consider other sports and entertainment when determining the market and failed to use a merger guidelines test established by the justice department.

Rule argued that to have a monopoly, there needs to be a defined market, and he contends that premium stock-car races are a market. Rule, who worked in the justice department's antitrust division in the 1980s, said the guidelines aren't meant to be the sole determination of a monopoly. He said NASCAR clearly has one in the market of premium stock-car racing because there is a difference in ticket prices, fan loyalty and the television revenue for Sprint Cup events.

That, combined with actions by NASCAR and ISC, is why the case should not be determined without a trial, he argued.

"We tried to go out and get independent tracks ... and we were stymied at every turn," Bill Markovits, an attorney for Kentucky Speedway, said outside the courtroom. "We were stymied by the pressure on these independent tracks by NASCAR and ISC."

Rule noted in court that by buying up tracks, NASCAR and ISC created "artificial barriers of entry" for Sprint Cup races.

Boies dismissed the Kentucky Speedway founders' argument that ISC and SMI work together to keep from getting into bidding wars for tracks. He said that could have been the case in the 1990s but certainly hasn't been the case since an SMI shareholder filed suit against NASCAR and ISC in 2002 (and later settled).

One of the nation's most noted attorneys as part of Al Gore's legal counsel in the disputed 2000 presidential election, Boies noted that the track founders failed to prove a market, failed to show what their injury was and that there was no link from the combined actions of NASCAR and ISC to Kentucky Speedway's getting a Cup date.

"Here you have the independent, lawful decision not to do (Cup) business with them," Boies said.

Boies listed several other racing series that compete at ISC tracks and said that any lack of success of other sanctioning bodies is not because of anything ISC has done.

"We made the point that, like other sports, NASCAR has the right to create its schedule and host events where it wants to," NASCAR spokesman Ramsey Poston said outside the courtroom. "We've done that to the benefit of the entire industry. ... The track developers were told repeatedly that the NASCAR Sprint Cup schedule was full and we would not be expanding the schedule for Kentucky Speedway."
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