NASCAR says Kentucky would not further NASCAR expansion in legal filing
International Speedway Corp. turned down an opportunity to buy Kentucky Speedway for $186 million and NASCAR officials indicated the track "would not further NASCAR's expansion goals," according to a filing Tuesday in the track's antitrust lawsuit against NASCAR and ISC.
NASCAR and ISC filed their brief to Kentucky Speedway’s appeal today in the U.S. Sixth Circuit Court of Appeals in Cincinnati, Ohio. In their brief, NASCAR and ISC reiterate many of the arguments they have made in the past in denying that they illegally conspire to keep tracks such as Kentucky from obtaining Sprint Cup races.
A Sprint Cup race was worth $6.51 million to a track operator in 2006, according to NASCAR and ISC’s brief.
Kentucky Speedway’s owners originally filed the lawsuit against NASCAR, a sanctioning body owned by the France family, and ISC, a track-operating company that is publicly traded and whose majority of voting stock is owned by the France family, in 2005.
NASCAR and ISC denied the antitrust claims, and in January a U.S. District Court judge concluded that there was not enough evidence for the case to go to trial. The appeal centers on whether there is enough evidence for a trial.
In May, the owners of Kentucky Speedway agreed to sell the 1.5-mile track located about 35 minutes south of Cincinnati to Speedway Motorsports Inc., a rival of ISC, for $78.3 million, including the assumption of $63.3 million in debt. Even though SMI is expected to close on the purchase in December, speedway founder Jerry Carroll said the original ownership group is continuing with the appeal.
SMI was designated as a co-conspirator when Kentucky Speedway revised its complaint in 2007 and NASCAR has told SMI Chairman Bruton Smith that as long as the litigation is pending, the speedway can’t get a Cup date. Smith has said that he will request NASCAR to move a Cup race from another SMI track to Kentucky once the lawsuit is resolved.
In its brief, NASCAR indicated that it is not willing to expand its schedule to include Kentucky. The owners of the track began lobbying for a Cup race in 2001, a year after it opened with a Truck series race in 2000. The track has played host to an event in both the Truck and what is now known as the Nationwide series since 2001.
“KYS continued to lobby for a Cup race, which NASCAR declined to award because providing a Cup race to KYS rather than other possible locations would not further NASCAR’s expansion goals,” the brief states.
Carroll’s group asked ISC to purchase the track, according to the filing today.
“As early as 1999, … KYS wanted ISC to pay $186 million for the facility, but ISC concluded that this price was excessive,” the brief said.
As part of its appeal, Kentucky Speedway noted that sanction fees had increased 828 percent from 1995-2000, 29 percent in 2001 and 16 percent in 2002. The average increase per track was 244.93 percent from 1998-2006.
In its response, NASCAR and ISC wrote: “Increase in sanction fees was extremely modest considering that between 2000 and 2006 the value of a Cup race to track operators went from $200,000 to $6.51 million, a 2,800 percent increase.”
No explanation is given in the brief, but part of that increase likely came from the fact that NASCAR took over the television rights of its events in 2001 to sell as a package to the networks as opposed to each track negotiating its own TV deal.
As part of its appeal, NASCAR reiterated several of its standing arguments:
• As a private company, it has the right to choose where it races.
“NASCAR’s decision not to award KYS a Cup race sanction does not result from any competition-reducing conduct by NASCAR or ISC, but rather from NASCAR’s lawful decisions about with whom and where it chooses to sanction its Cup races,” NASCAR and ISC attorneys wrote.
• NASCAR and ISC cannot violate antitrust law because of legal precedent that two companies that are controlled by the same group of people do not represent a conspiracy between two separate companies.
“Although the formalities of separate governance reflect certain obligations of the companies, such formalities do not change the ultimate fact that the France family controls both NASCAR and ISC,” the brief states.
• NASCAR and ISC contend they don’t stifle competition.
“The fact is that NASCAR’s denial of KYS’s bid for a Cup race promotes, rather than inhibits, competition because KYS’s availability as a track to a potential rival sanctioning body makes the emergence of a NASCAR rival easier, not more difficult,” according to the NASCAR/ISC brief.
Both sides still have final arguments to file in the appeal, and a hearing is not expected until January 2009 at the earliest.
“NASCAR’s remarkable growth has benefited the entire industry, including drivers, teams and tracks,” NASCAR spokesman Ramsey Poston said. “The Kentucky Speedway’s lawsuit would essentially seek to shatter the successful pro-competitive model. NASCAR continues to defend the industry and protect the integrity of the sport and its fans.”
