CHARLOTTE, N.C. — An expert witness has estimated that NASCAR owes 23XI Racing and Front Row Motorsports a combined $364.7 million in damages, which he determined with a "but-for world" exercise.
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Professor Edward A. Snyder, who holds a Masters in Economics from the University of Chicago, appeared in court on Monday morning as the expert witness of 23XI Racing and Front Row Motorsports. These two teams are the Plaintiffs in an antitrust lawsuit in which they allege NASCAR and CEO Jim France used anti-competitive acts to maintain an illegal monopoly.
Professor Snyder spent the majority of the day on the stand, split between direct examination and cross examination. It was during this session that he explained that he determined NASCAR owes 23XI Racing $215.8 million and Front Row Motorsports $148.9 million in damages.
Photo credit: 23XI Racing
How did he arrive at this number? The answer boils down to a multi-part equation featuring three different types of categories — Four years of lost profits, reduced market value, and additional lost revenues from both teams racing as Open teams for 16 events.
To calculate each category, Professor Snyder looked at two scenarios. He examined the real world numbers in which NASCAR committed these alleged anti-competitive acts. He then focused on a "but-for world" that assumes no anti-competitive acts occurred.
To calculate numbers in this "but-for world," Professor Snyder needed to find a benchmark for comparisons. To determine the "best" one, he looked at eight sports leagues. This included the NFL, NHL, PGA Tour, MLS, WNBA, IndyCar, NBA, and Formula 1.
As Professor Snyder explained, F1 had similarities that set it up as the right benchmark. This series feature teams competing in a variety of geographic locations with specialized equipment (cars). Sometimes, new teams enter the league.
Other times, the teams and the leagues have periodic negotiations. Additionally, neither F1 teams nor NASCAR teams hold equity in their respective leagues like in the NFL or NBA.
According to Snyder's presentation, F1 paid teams an average of 45% of revenue between 2017 and 2024. Some years, the teams received more than 51% of overall revenue. Other years, they received as low as 37%.
Snyder said that 23XI Racing received $202 million from NASCAR in annual revenue between 2021 and 2024. He said that this number would have increased to $253 million using the F1 percentages. This came out to $41 million in damages through lost profits. Snyder also noted that Front Row Motorsports had $43 million in damages through lost profits.
The lost market value focuses on an end date of Dec. 31, 2024, the final day that the 2016 Charter Agreement existed. This figure focuses on the values of the teams moving forward into the 2025 Charter Agreement, and it uses a complex, six-step formula to determine the number.
According to Snyder, 23XI Racing had $92.3 million in reduced market value per charter ($184.6 million total). However, the ultimate number became $163.8 million after Snyder subtracted potential increased charter costs. Front Row Motorsports, for comparison, had a $96.4 million total reduction in total market value.
Photo credit: 23XI Racing
The third part of the calculation took into account the 16 races that 23XI Racing and Front Row Motorsports ran as open teams. They did not receive the money from the fixed owner's plan or the performance plan. This totaled $10.7 million for 23XI Racing and $9.4 million for Front Row Motorsports.
According to Snyder, NASCAR's expert said that the league would have gone out of business paying this money to the teams. He pushed back while saying that NASCAR had $2.2 billion in assets, a $5 billion estimated value from Goldman Sachs, and an investment grade rating after paying down the debt to acquire ISC.
Snyder then testified that NASCAR earned $250 million annually between 2021 and 2024 and that the France family received $400 million during that same time period.
Lawrence Buterman, attorney for NASCAR, began cross-examination at 3:04 p.m. and began trying to pick apart Snyder's presentation. He accused the economist, who has testified in more than 30 cases, of not doing the work regarding teams, OEMs, drivers, tracks, and NASCAR's profit margins when putting together this presentation.
Buterman also argued that Snyder's F1 model is not correct and that his experts have issues with the presentation. He argued that F1 and NASCAR are an apples and oranges comparison.
The cross-examination ended after 1 hour and 56 minutes, but it will continue on Tuesday morning with Buterman continuing to ask Snyder questions.
