Ruling allows ISC, NASCAR to dodge antitrust thrust

The news circulated quickly on Monday that U.S. District Court Judge William O. Bertelsman had thrown out the antitrust lawsuit filed by Kentucky Speedway, ending a nearly three-year battle that could have changed the face of the sport as we know it.

The $400 million suit, filed against both NASCAR and its sister company, the International Speedway Corp., was the latest in a long line of legal actions the sport has had to battle in the past few seasons.

But this one struck at the heart of the sport's ruling body, plus the entity which owns 12 tracks at which the series conducts 19 of the 36 point races on the Sprint Cup Series schedule.

Both are controlled by the France family. William H.G. France founded both companies, NASCAR in the 1940s and ISC in 1950. ISC originally was founded to finance construction of Daytona International Speedway; the elder France sold shares in the company for $1 each. It took nine years, but the track finally opened in 1959.

Bertelsman's ruling, which can still be appealed by Kentucky Speedway, essentially said that Kentucky had not proved its case, which was that NASCAR and ISC had illegally conspired to deny Kentucky a date on the Cup schedule. (read more)

Kentucky officials asked in the suit that the France family divest itself of controlling interest in ISC, which is publicly traded, or sell NASCAR, which is privately held.

"NASCAR is very pleased by the U.S. District Court's ruling to dismiss this case," NASCAR's Ramsey Poston said. "It puts an end to any question about which locations and dates NASCAR can operate its races. Like other sports such as the NFL, MLB and the NBA, NASCAR can host its events where it decides is best for the sport and its fans."

NASCAR and ISC have been down this road before, most notably in 2002, when a Speedway Motorsports Inc. shareholder, Francis Ferko, filed suit alleging that NASCAR conspired to withhold a second race date for Texas Motor Speedway.

In that one, also filed in U.S. District Court and administered by celebrity attorney Johnny Cochran, Ferko and another SMI shareholder, Rusty Vaughan, alleged that NASCAR reneged on a verbal promise to grant a second race to the showplace TMC facility, the crown jewel of the SMI empire upon its completion in 1997.

After more than two years of legal wrangling on the issue, NASCAR and the plaintiffs settled out of court, setting in motion a series of events that shook up the racing schedule.

North Carolina Motor Speedway in Rockingham was sold to SMI, and NASCAR shifted The Rock's lone remaining date to Phoenix International Speedway, a track owned by ISC. As a result, NCMS was left without a Cup date and subsequently closed. It was recently purchased by driver-turned-racing-school-owner Andy Hillenburg.

The settlement also cost ISC's Darlington Raceway its traditional Labor Day event, the Southern 500, which went to California Speedway, another ISC track. Atlanta, an SMI track, kept both its dates.

The impact of such a settlement in the Kentucky case could have opened NASCAR and ISC up to more suits of the same nature, making it a virtual certainty that other tracks without dates would seize upon the precedent as well.

While the Ferko and Kentucky suits are similar in basis and foundation, there are differences between them, notably market size. NASCAR spokesman Poston alluded to that in his statement on Monday.

The basis for the Ferko lawsuit also implied breach of an oral contract, where the Kentucky suit did not. Ferko's suit was on behalf of shareholders who were, in the language of the suit, being damaged by the alleged action of NASCAR and ISC.

Kentucky's filing had more to do with breaking into the sport's top tier (it already hosts Nationwide and Craftsman Truck Series events, but not Sprint Cup events).

NASCAR has repeatedly stated that Kentucky's location, 40 miles east of Cincinnati, was not good for the sport since it was so close to facilities which already held events, such as Bristol, Indianapolis, Richmond and Atlanta.

"What we're going through now is not a great deal different than what the NFL, the NBA and certainly the NHL went through: the nationalization of the sport," H.A. "Humpy" Wheeler, president and general manager of Lowe's Motor Speedway, and president and chief operating officer of Speedway Motorsports, told reporters at the time of the Ferko settlement.

"There are forces at work outside of racing -- sponsors or TV -- that want those bigger numbers, and you can't get bigger numbers without bigger markets. It's going to be very difficult economically if you don't have 100,000 seats. You might be able to get along for a while, but with the way purses have escalated, you're going to have to have those seats."

Wheeler was speaking of Darlington and Rockingham, but his words could easily be applied to Kentucky some four years later.