Tension filled the Western District of North Carolina courtroom Tuesday as Denny Hamlin faced a rigorous cross-examination during the second day of testimony in the antitrust lawsuit filed by 23XI Racing and Front Row Motorsports against NASCAR.
Hamlin, a three-time Daytona 500 winner and co-owner of 23XI Racing alongside NBA legend Michael Jordan, sparred with NASCAR’s legal team over team profitability, contradicting public statements, and the actual value of Cup Series charters.
In the conclusion of direct examination by plaintiffs’ attorney Jeanifer Parsigian, Hamlin disclosed that 23XI Racing – founded in 2021 – turned a profit of more than $2 million in 2022 and more than $3.5 million in 2023. However, Hamlin argued these figures were misleading, noting the profit margin hovered around 2.26% of revenue. He testified that the team’s survival depended heavily on outside sponsorship rather than revenue sharing from the sanctioning body.
“Our costs were not covered,” said Hamlin. “I have spent 20 years in this sport trying to make it better and make it grow. All I know is that we were right, and they were wrong, and they needed to be held accountable.”
The atmosphere shifted during cross-examination by Lawrence E. Buterman, outside counsel for NASCAR from Latham & Watkins LLP. Buterman scrutinized Hamlin’s claim that the sport’s economic model is broken, pointing to Hamlin’s initial pitch to Jordan, which projected annual profits of $900,000.
Buterman highlighted that Hamlin had publicly praised the “Next Gen” (Gen-7) car – the vehicle introduced in 2022 designed to lower costs. While the lawsuit alleges the car is financially burdensome, Buterman played a clip from a podcast featuring Hamlin and broadcaster Kenny Wallace where Hamlin called the car “a net positive for the sport.”
Hamlin, who earns approximately $14 million annually as a driver for Joe Gibbs Racing, grew visibly frustrated. He testified that he felt obligated to “paint a rosy picture” of the sport in public to avoid fines or a summons to the NASCAR hauler for a “tongue lashing.”
“Those are your words?” Buterman asked after reading a transcript of Hamlin’s past comments.
“And I see what you’re trying to do with them,” Hamlin retorted, drawing a chuckle from Jordan, who was seated directly behind the plaintiffs’ legal team.
The defense zeroed in on the massive appreciation of 23XI’s assets to undermine the claim of financial injury. Buterman presented discovery documents showing the total capital investment from 23XI principals was $23.9 million – significantly lower than the $45 million Hamlin claimed to have invested personally.
Furthermore, an expert witness for the plaintiffs is expected to value 23XI Racing at $160.2 million as of the close of 2024.
Despite this equity growth, 23XI is seeking $205 million in damages for lost potential profit under the 2016 charter agreement. Buterman noted this request represents a roughly 900% return on investment.
When asked if he thought such a return was fair, Hamlin demurred: “I will leave it to the expert to answer.”
The court also heard details regarding 23XI’s aggressive acquisition of charters. The team purchased its three charters for $4.7 million, $13.5 million, and $28 million, respectively. When Buterman asked if Hamlin was aware the current market value of a charter had risen to $45 million, Hamlin replied, “I only know that we paid $28 million for the last one.”
Following Hamlin, the plaintiffs called Scott Prime, NASCAR’s executive vice president of global strategy. Prime was instrumental in both the 2016 and the contentious 2025 charter negotiations.
Jeffrey Kessler, lead attorney for the plaintiffs, focused his examination on NASCAR’s exclusive agreements with racetracks, specifically those owned by Speedway Motorsports Inc. (SMI). The plaintiffs allege these exclusionary contracts prevent teams from competing in alternative racing series, cementing NASCAR’s monopoly power.
Kessler introduced text messages revealing internal friction among NASCAR leadership. The evidence suggested that NASCAR President Steve Phelps and Chief Operating Officer Steve O’Donnell had advocated for offering more concessions to the teams during negotiations, but were overruled.
Ultimately, 13 of the 15 chartered teams signed the 2025 agreement. 23XI Racing and Front Row Motorsports declined, opting to file the antitrust action, claiming the terms were “take-it-or-leave-it” offers that stripped teams of intellectual property rights and permanent governance.
Support AFP
Share
