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12/09 16:13 CST Richard Childress testifies NASCAR made it impossible for him
to not sign revenue model
Richard Childress testifies NASCAR made it impossible for him to not sign
revenue model
By JENNA FRYER
AP Auto Racing Writer
CHARLOTTE, N.C. (AP) --- Hall of Fame team owner Richard Childress testified
Tuesday in Michael Jordan's federal antitrust lawsuit against NASCAR that he
would not have signed the 2025 revenue sharing model if refusing to do so would
not have put Richard Childress Racing out of business.
"I would not have signed those charters if I was financially able to do what I
do," the six-time championship winning owner testified. "We are a blue-collar
operation."
Childress has participated in NASCAR for 60 years. NASCAR was founded in 1948
by the Florida-based France family and Childress has a longtime personal
relationship with the France's.
Childress testified he pleaded with chairman Jim France for the charters to be
made permanent instead of renewable. France refused.
Childress testified he supports the charter system that was implemented in 2016
when race teams "were worth 10 cents on the dollar at most. We didn't have
nothing."
He admitted to the added value to his team in charters, but said the equity
falls short of its financial potential if the charters were permanent.
In fact, a declaration in which Childress expressed his satisfaction with the
system, Childress pushed back and insisted NASCAR attorney Christopher Yates
read the final sentences in which he explains the charters need to be
permanent. He said he added those sentences to a declaration that had been
given to him to sign.
Childress was at times contentious with Yates, partly because he was determined
to show his displeasure over not receiving permanent charters.
He said he only accepted the offer in 2024 when Hendrick Motorsports said it
was signing and "all I know is financially we would be out of business" if he
did not follow suit.
Earlier Tuesday, the commissioner of NASCAR testified against the racing series
to the frustrating two-plus years of negotiations on a new revenue sharing
model with teams, noting that Jordan's financial advisor would not compromise
on key issues.
Steve Phelps, who was president of NASCAR during the negotiations, said Jordan
right-hand man Curtis Polk was the lead representative for the teams and held
firm in their demand for increased revenue, permanent charters, a voice in
governance and 1/3 of any new revenue streams.
The deal finally presented to the teams in September 2024 did not include
permanent charters or a voice in governance, but NASCAR gave the teams a firm
deadline to accept its final offer or forfeit their charters. 23XI Racing,
owned by Jordan, Polk and three-time Daytona 500 winner Denny Hamlin, and Front
Row Motorsports, owned by Bob Jenkins, were the only two teams out of 15
organizations to refuse to sign and have instead sued.
The charter system is equivalent to the franchise model used in other sports.
In NASCAR a charter guarantees cars a spot in the 40-car field each week, as
well as specified financial terms.
Phelps, promoted to become NASCAR's first commissioner earlier this year,
testified on the seventh day of the trial that he worked very hard to get the
teams the best deal possible. But he said the teams' initial request for $720
million in revenue a year guaranteed to them would have put NASCAR out of
business, and communications between NASCAR executives showed that the France
family, which founded and owns the series, would not budge on permanent
charters.
At the same time, Polk would not budge, either.
"It was one of the most challenging and longest negotiations I've ever been
part of," said Phelps, who admitted he didn't particularly enjoy negotiating
with Polk, who was at the time the representative for the "Team Negotiating
Council."
"The TNC never wavered off their four pillars. It was just the same thing, the
same thing, and that was very frustrating."
Phelps testified at one point NASCAR believed it had landed on a new charter
agreement that satisfied the teams but it was contingent on NASCAR finalizing
its new media rights deal.
"I thought we'd just plug in the numbers," said Phelps, who testified NASCAR
was hoping to land a media deal worth $1.2 billion. When it became clear the
media rights deal wouldn't net that much money, Phelps said the teams asked to
set a floor in negotiations.
NASCAR ultimately got a media deal worth $1.05 billion --- still an increase of
$33 million a year from the previous deal --- and Phelps said "every dollar"
went to the race teams when it began this year.
However, the ultimate revenue payout to teams is $431 million annually, the
charters are not permanent and the teams did not get a voice in rules and
regulations.
Even so, Phelps testified he believed the charter agreement was "a fair deal."
But, internal NASCAR communications again showed the Florida-based France
family was a "brick wall" on the issue of permanent charters and executives
found chairman Jim France's stubbornness to be frustrating during negotiations.
Messages were shown in court in which Phelps and current NASCAR President Steve
O'Donnell repeatedly lashed out at the lack of internal progress as they fought
to get the teams the best deal possible.
Pace in the trial has picked up on the order of U.S. District Judge Kenneth
Bell, who has grown weary that its taken the plaintiffs seven days of testimony
and counting.
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