Join Date: Dec 2004
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Kentucky Speedway sues NASCAR
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."
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...
23 Years and Counting...
Last edited by Caveat Emperor; 07-14-2005 at 12:15 PM.