Kentucky Speedway sues NASCAR

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Ky. Speedway sues NASCAR
Track demands $400M and a 2006 Nextel Cup race

By Mike Rutledge and Cliff Peale
Enquirer staff writers

COVINGTON - Kentucky Speedway's owners are seeking more than $400 million in damages and a 2006 Nextel Cup race in a lawsuit filed in federal court Wednesday against NASCAR and International Speedway Corp.

Cincinnati lawyer Stan Chesley, representing Kentucky Speedway LLC, said NASCAR and ISC violated federal antitrust laws by restricting which tracks host NASCAR's premier Nextel Cup races.

Chesley said NASCAR officials told the speedway's owners that the Sparta track would not get a Nextel Cup event.

"They literally said ... you're not going to get a race," he said.

The suit also seeks an injunction forcing NASCAR to establish a competitive-bidding process in awarding Nextel Cup races and elimination of some Nextel Cup rules that the speedway calls monopolistic.

"In my opinion, the facts clearly support a conclusion that NASCAR and ISC have colluded to exclude competition in order to financially benefit themselves," Chesley said.

"By doing so, they have harmed not only Kentucky Speedway but also all stock-car racing fans nationwide."

Officials with NASCAR and ISC, both based in Daytona Beach, Fla., said they had not reviewed the suit and wouldn't comment.

"We've not even had a chance to review the lawsuit at this time, but as a matter of corporate policy we don't comment on pending litigation issues," NASCAR spokesman Ramsey Poston said. "That's our statement."

The 20-page lawsuit filed in U.S. District Court in Covington says NASCAR and ISC share common officers, including Bill France Jr., ISC's chairman, who served as NASCAR chairman from 1972 to September 2003. He remains a NASCAR vice chairman.

Other members of the France family also hold leadership positions with both entities.

Fans eager for Nextel race

As NASCAR fan Tim Finke cut a hind quarter of beef Wednesday evening for a customer at Bill Finke & Sons Meats in Fort Wright, he said he hopes Kentucky Speedway wins this battle.

"I think it'd be great," Finke said. "I'd love to have a (Nextel) Cup race this close."

Finke has traveled to tracks in Bristol, Tenn., and Chicago, and says "everything about the Kentucky Speedway is nicer."

"They're definitely being deprived," Finke said. "I don't think it's right. It's more or less just a monopoly. They can have a race wherever they want."

Since before Kentucky Speedway opened in 2000, the raceway has sought a piece of NASCAR's premier series, then called Winston Cup. The 858-acre race facility, which has more than 68,600 seats and 50 luxury suites, does host NASCAR's lower-rung Busch and Craftsman Truck series races. The track could be expanded to seat more than 100,000.

The lawsuit argues that NASCAR and ISC have illegally restricted the award of Nextel Cup races to newly built or purchased ISC racetracks, or ones ISC is considering buying, shutting out other qualified tracks.

Despite dramatic increases in demand, NASCAR has created only three new Nextel Cup races since 1999, each at ISC-owned tracks in Florida, Illinois and Kansas, according to the suit. ISC-affiliated tracks now host 20 of the 38 Nextel Cup races, and ISC plans to build tracks in New York and the Pacific Northwest to host Nextel races.

Here's how the speedway's lawsuit contends that various interests have been harmed:

Fans, because of limitations on the number of races, face higher ticket prices and have "fewer options to watch their favorite drivers."

Drivers have their winnings limited because of rules that restrict how often they can test their vehicles, including during non-NASCAR races.

Sponsors have fewer options in aligning with races.

Television and radio broadcasters are limited in the number of races that feature the highest-caliber drivers.

Independent tracks such as Kentucky Speedway can't get races.

"This is a day Kentucky Speedway did not want to happen," Chesley said. "We have done everything to avoid this day. We've even looked at trying to buy a race and bring it here. ... We are here because we have no other place to go, other than the United States federal court."

Speedway officials deferred comment to Chesley, who said that if monopolistic practices are proven in federal court, damages are automatically tripled.

Chesley acknowledged that NASCAR could end up pulling its Busch or Craftsman races.

"I would call that retribution," he said. "If that's how NASCAR wants to play, that's a sad day for the United States of America."

Chesley declined to estimate how much the lack of a Nextel Cup race has cost the track, but he said it is in no danger of closing.

Suit 'not surprising'

Dennis McAlpine, a securities analyst with McAlpine Associates LLC in Scarsdale, N.Y., who follows the motor sports industry, said he wasn't surprised by Kentucky Speedway's lawsuit because of a settlement NASCAR reached last year on a suit filed by Francis Ferko, a shareholder of race promoter Speedway Motorsports Inc.

Under that settlement, SMI, which controls six tracks that host Nextel Cup races, bought North Carolina Speedway from ISC. That track closed and its race moved from Rockingham, N.C., to Texas.

"It's not surprising at all, given the outcome of the Ferko suit, in which there was another race granted to Texas Motor Speedway," McAlpine said.

"I think (Kentucky Speedway chairman and developer) Jerry Carroll has done an excellent job with that track," McAlpine said. "I think given the circumstances, he has made the most of what he has for races, and has promoted some of the most successful Bush races and IRL (Indy Racing League) races."

McAlpine years ago worked for an investment bank that sought to raise money for Kentucky Speedway's construction.

"NASCAR and ISC's activities have harmed race fans in Ohio and Kentucky," Houston-based lawyer Steve Susman, also representing the speedway, said in a news release. "NASCAR's treatment of Kentucky Speedway makes the most egregious tactics of drivers fighting for position on the track look like a Sunday-afternoon drive in the country."

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Through various "sources" (insert dramatic music here) I have, I was able to obtain a copy of the complaint yesterday before the press conference and had a chance to peruse it. They're definately just hoping for some sort of settlement that allows Carroll to either buy an ISC racetrack and move the race from there to Kentucky or just grants Kentucky a Nextel date and tells them to stop bothering NASCAR with lawsuits.

The interesting question is what happens to Carroll if he loses on dismissal or summary judgment; he'll be the owner of a giant white elephant that will never get a Nextel cup race as long as the Frances are in charge, and he'll likely be forced to sell for pennies on the dollar to try and recoup some of his investment. I don't think there's much of a chance of that (they've likely met their pleading burden for both a 6(b) and a 56 motion), but still a rather large risk...

Either way, you know this isn't going much further past initial motions by the defense, if for no other reason than Chesley's law firm simply doesn't have the manpower or attorneys to handle the huge reams of discovery they're getting from the NFL in the Hamilton County suit AND the huge reams of discovery they'd likely have to pour through to get this suit to trial.

Interesting stuff, though...

WHy shouldn't the tracks bid for the rights to hold races?

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Originally Posted by Ricardo Cabesa

WHy shouldn't the tracks bid for the rights to hold races?

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By that logic, shouldn't Neyland Stadium be able to bid for hosting a Super Bowl? Professional sports have always been "closed" markets, with only a limited number of approved individuals owning franchises or venues.

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Originally Posted by Ricardo Cabesa

WHy shouldn't the tracks bid for the rights to hold races?

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Good question. I made the comparison to Krono that this was like Louisville building a big football stadium and then suing the NFL because they didn't get a team there. A difference is that the NFL has a process they go through for expansion teams. Cities bid for the right to get an NFL team and the NFL studies all the pros and cons and makes the decision where the next team goes. It doesn't appear that NASCAR has a process like that since they just hand races out to their own speedways. OTOH, I doubt no one promised Jerry Carroll that if he built it, NASCAR would come.

Here is the Lexington paper's account of the proceedings. Apparently, there is a precedent (TX) in NASCAR having to issue a settlement...

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Kentucky Speedway sues NASCAR
Track wants Nextel Cup race
By Beth Musgrave And Alicia Wincze
HERALD-LEADER STAFF WRITERS

The Kentucky Speedway is suing NASCAR and the International Speedway Corp., alleging the companies violated antitrust laws and kept the Kentucky track from getting a lucrative Nextel Cup race.

"In my opinion, the facts clearly support a conclusion that NASCAR and ISC have colluded to exclude competition in order to financially benefit themselves," Stanley Chesley, a Cincinnati-based lawyer representing Kentucky Speedway, said in a written statement. "By doing so, they have harmed not only Kentucky Speedway but also all stock-car racing fans nationwide."

The lawsuit -- filed yesterday in U.S. District Court in Covington -- alleges NASCAR and International Speedway Corp. are both controlled by members of the France family -- whose patriarch, Bill France, started NASCAR in the 1950s. Members of the France family are on both NASCAR and ISC boards.

NASCAR also owns 10 percent of ISC stock. Tracks affiliated with ISC host 20 of 38 Nextel Cup series events. Since 1999, NASCAR has created only three additional Nextel Cup series races, all on ISC-owned tracks in Florida, Illinois and Kansas, the lawsuit says.

Two tracks in development in New York and on the West Coast are ISC-owned and have been guaranteed Nextel Cup races, the lawsuit says.

The Kentucky Speedway, a $150 million-plus track, opened in 2000 in Sparta in Gallatin County. It hosts two NASCAR-sanctioned races, one in the Craftsman Truck Series and one in the Busch Series. But neither series draws the fans, revenue and marquee drivers of a Nextel Cup race.

The Kentucky Speedway is asking for $400 million in damages and wants NASCAR to establish a competitive bidding process for Nextel Cup events.

NASCAR and ISC officials did not immediately return phone calls seeking comment.

Last month, Bill France Jr., now retired after decades as NASCAR's president, told The Associated Press he's tired of hearing Kentucky Speedway president Jerry Carroll campaign for a Cup race.

"You've got the guy whining over there who was told years ago when he built the place there wasn't a Cup race in his future," France said. "Yet he's down there crying wolf. I guess that's what life is. That's the America we all know and love."

The Kentucky Speedway referred all questions to Chesley. On its Web site, it posted a list of answers to questions about the lawsuit.

Carroll told the Herald-Leader in June that he was frustrated with the powers-that-be at NASCAR. Carroll said the time for "trying" to get a Nextel Cup race is done; "now is the time for doing."

The Kentucky Speedway lawsuit is at least the second antitrust lawsuit against NASCAR.

The Texas Motor Speedway settled a similar lawsuit against NASCAR in May 2004. The Fort Worth-area racetrack alleged NASCAR had promised the track a second Nextel Cup race and NASCAR and ISC violated antitrust laws.

As part of the settlement, the Texas track's parent company -- Speedway Motorsports -- purchased North Carolina Speedway from ISC. North Carolina was removed from the Nextel Cup schedule, and Texas Motor Speedway got its second date.

The case was settled before a federal judge could rule on the antitrust claims.

Samuel A. Cherry Jr., an Alabama lawyer who represented the shareholder who originated the Texas lawsuit, said that from a legal standpoint, the antitrust claim against NASCAR and ISC might be difficult to prove.
"It's going to be an extremely difficult undertaking in Kentucky," Cherry said. "I'm very familiar with the Kentucky track. It's a beautiful track, and it's regrettable that they don't have a Cup date."

NASCAR has presented a fairly compelling business reason why bidding for Nextel Cup races would create a chaotic season for fans and drivers alike, Cherry said.

"The race facilities have to be confident that the money they spend on improving their facilities will pay off in the future," Cherry said. NASCAR's fan base knows the Nextel Cup series schedule and plans vacations and weekend excursions accordingly, he said.

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Originally Posted by Ricardo Cabesa

WHy shouldn't the tracks bid for the rights to hold races?

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Tough question, but its a privately held organization. But, I can see possible anti-trust ramifications. Being that about half of the tracks are owned by ISC. ISC's board members are mainly the France family which are the main people that run NASCAR.

In any event I used to be a huge NASCAR fan and still watch it, but the rules changes of made the races a lot less interesting and competitive. I'm starting to watch the IRL a little more. If they just had a few american drivers in the IRL that series could have a chance to over take NASCAR if marketed properly. Just look at how close most of those races have been.

I think a problem is that tracks do get 2nd dates, why not have 36 (is the schedule still 36?) races at 36 different tracks, do we really need repeats?

Of course that opens a whole new can of beans.

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Originally Posted by KronoRed

I think a problem is that tracks do get 2nd dates, why not have 36 (is the schedule still 36?) races at 36 different tracks, do we really need repeats?

Of course that opens a whole new can of beans.

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That's a great point. I'm no NASCAR fan but why do some tracks get several races why others don't get any? If college sports teams used NASCAR's logic, they'd play the same games every year. You wouldn't get a Texas to come to Ohio State. You set these dates early enough and fans can plan their vacations accordingly.

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Originally Posted by 2001MUgrad

I'm starting to watch the IRL a little more. If they just had a few american drivers in the IRL that series could have a chance to over take NASCAR if marketed properly. Just look at how close most of those races have been.

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The IRL is the great secret in American motorsports. I'm no fan of Tony George, who crippled open wheel racing by his creation of the IRL, but no major racing series anywhere has the competitive closeness of most IRL races, with cars lap after lap running wheel-to-wheel at 210+ mph and consistent photo-finishes.
A few more American drivers would help the IRL. It is a shame for the series that racers such as Jeff Gordon and Tony Stewart, whose roots are in open wheel racing, defected to NASCAR.

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Originally Posted by KronoRed

I think a problem is that tracks do get 2nd dates, why not have 36 (is the schedule still 36?) races at 36 different tracks, do we really need repeats?

Of course that opens a whole new can of beans.

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I've wondered that for a long time. Daytona, Talladega, Charlotte, Bristol, and probably Richmond all deserve two dates a year. On the other hand, there is no reason whatsoever for the teams to trek to Long Pond, Pennsylvania or Loudon, New Hampshire twice a year.

I certainly hope this works for Kentucky Speedway and they get a date. There are no really good options for this area for watching a Nextel Cup race. Despite all its history, Indianapolis is the worst venue in the nation to watch an event, and Bristol tickets run $125 apiece minimum, and you're lucky to get them for that.

Time for a thread hijack!

The IRL is pure and utter garbage. The cars are a complete joke, not to mention butt-ugly. It's not hard to have close racing when the cars are so grossly underpowered and overdownforced. They simply are physically unable to break away. And with the cars glued down to track so much the talent necessary to drive one isn't that high, the bar has been seriously lowered in that series. As far as the close finishes, Tony Kanaan admitted after a recent win that it was essentially staged. He and his teammate drove side by side knowing nobody would be able to pass, and made it close at the line. Oh boy, how exciting. And I haven't even gotten into the series' abysmal safety record, one so bad you could make a real case for criminal negligence.

The comments about needing more American drivers are funny in an ironic way. Back when the series was started the whole selling point was that they were going to give the American short track oval racers a chance, that it would bring the local hereos back to the big time. Look at the series now. All the things that were deemed evil by Tony George back in 1996 (foreign drivers, overseas races, road courses, expensive engine leases) are all things he now has. The original premise was nothing but a lie. It was all about power and ego.

Tony George decided he had to fix what wasn't broken. As a result he spilt the sport in half and the whole thing fell into virtual irrelevence. It's going to take a looooooong time for open wheel racing to crawl out of the hole he dug. The sooner the IRL disappers the better.

Rant over, I now return you to your regularly scheduled thread!

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Originally Posted by Danny Serafini

The cars are a complete joke, not to mention butt-ugly.

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The paint schemes on the cars was one of the first things that drew me to love NASCAR. No one can fully appreciate the beauty of the cars until you've stood up close to them. Even some of the cars that appear bland and ugly on television are really beautiful when seen in person.

By the same token, that's one problem I have with watching open wheel racing. You look out onto the track, and they all pretty-much look the same.

I was under the impression (I'm sure I read it somewhere), that Carroll had talked with NASCAR before Kentucky Speedway was ever built and was promised that they'd get a race after the track had been open for five years or so.

Privately funded tracks aren't built on speculation; it's just too darned expensive... I always read that Carroll and NASCAR were in constant touch throughout Kentucky Speedway's construction. In addition, NASCAR was in on and approved the track design.

They had all their ducks in a row before the first piece of ground was dug up. What happened?

And it's not that the drivers don't like it... quite the opposite, in fact, as the Bush drivers always seem to rave about the track after they race there.

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Originally Posted by TeamBoone

I was under the impression (I'm sure I read it somewhere), that Carroll had talked with NASCAR before Kentucky Speedway was ever built and was promised that they'd get a race after the track had been open for five years or so.

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This has evolved into a 'he said--she said'....If you believe Carroll, that is exactly what transpired.

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Originally Posted by TeamBoone

I was under the impression (I'm sure I read it somewhere), that Carroll had talked with NASCAR before Kentucky Speedway was ever built and was promised that they'd get a race after the track had been open for five years or so.

Privately funded tracks aren't built on speculation; it's just too darned expensive... I always read that Carroll and NASCAR were in constant touch throughout Kentucky Speedway's construction. In addition, NASCAR was in on and approved the track design.

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If it isn't in writing, it's not worth the paper it's printed on.

Seems to me an intelligent solution would be for NASCAR to have a set number of racetracks they hold races at, i.e. Daytona 500, Tallegeda, Watkins Glen, etc. All the races that have been around for years. Then have a few events rotate at different venues and open that process up to the highest bidders. You think NASCAR wouldn't make money having tracks bidding against each other just for the privilege of hosting a Nextel Cup race? Also rotating the races between sites increases demand for those races. It's simple economics. Anytime you have a limited supply of a product that there is a very high demand for you can charge about whatever you want for that product.