In hopes of trying to increase the revenues and influence of NASCAR Cup Series teams, 23XI Racing and Front Row Motorsports filed a lawsuit against NASCAR and Chairman Jim France.
The teams filed the lawsuit Oct. 2 in federal court in Charlotte, claiming NASCAR’s actions violate antitrust laws.
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This story will be updated with the latest developments and analysis in the case. Information comes from documents filed in the case and through conversations with those knowledgeable on antitrust issues and NASCAR racing.
What is the latest happening in the suit?
23XI and Front Row filed a motion Oct. 9 for a preliminary injunction to allow them to race in 2025 as chartered teams — they have refused to sign the charter agreement, which was signed Sept. 6 by the 13 other Cup organizations — while the lawsuit proceeds.
To get a preliminary injunction, 23XI and Front Row primarily must show a likelihood of success on the merits of the case and irreparable harm if the injunction is not issued. They also must show that a preliminary injunction is in the public interest.
The teams claim that the guaranteed spot in every race (which a charter team gets) is critical to their business. The Daytona 500 alone is worth about 15% of the entire season’s purse, according to the teams’ court filings, and “there is a risk that irreplaceable sponsors and drivers could abandon [the teams] if they have to compete as open teams and do not qualify for all their races.”
Front Row owner Bob Jenkins in court filings stated: “Because of our love for the sport and our determination to maintain the race team we have built, we are determined to race next year even if we have to do so on an ‘open’ basis, but at some point, the losses may become so severe that we simply cannot continue — causing irreparable harm to our business, our employees, and the communities and fans we are associated with.”
What is next?
NASCAR must file a response to that preliminary injunction motion by Monday (Oct. 14) and then there will be hearing Wednesday (Oct. 16) with each side getting 30 minutes. The judge wouldn’t necessarily have to rule on the day of the hearing but typically would in the days following.
The teams also have asked for limited discovery to obtain documents and files from NASCAR that they believe could help them prove they will succeed on the merits of the case. The judge would have to rule on that request prior to any hearing.
Who are the parties of the suit?
The 23XI Racing team is owned by driver Denny Hamlin (who drives for Joe Gibbs Racing), basketball icon Michael Jordan and Jordan business associate Curtis Polk. They field cars for Bubba Wallace and Tyler Reddick, and plan to add a third car next year regardless of the lawsuit status.
The Front Row Motorsports team is owned by restaurant franchisee Bob Jenkins. It fields cars for Michael McDowell (who will be replaced by Noah Gragson next year) and Todd Gilliland. It plans to add a third car next year regardless of the lawsuit status.
NASCAR is owned by the France family, primarily Jim France and France’s niece, Lesa France Kennedy. Jim’s grandfather, Bill France Sr., founded NASCAR in 1948.
What are the basics of the suit?
The teams say that a premier stock-car racing series must have premier stock-car racing teams to have a premier stock-car racing product. They argue that because NASCAR owns the series and the majority of the tracks while also requiring the teams to purchase parts and pieces for their cars from a NASCAR-approved supplier, as well as prohibiting teams and tracks from participating in other racing (primarily stock-car racing) series without NASCAR’s approval, that they violate antitrust law by controlling the market where premier stock-car racing teams can compete. They view the new 2025 charter agreement as unfair when it comes to revenue distribution to the teams in combination with the restrictions.
What is the charter agreement?
The 2025 charter agreement is designed to be an extension of the charter system that was formed in 2016 as NASCAR attempted to address the team business model by defining the guaranteed revenues teams would get and guaranteeing a spot in every Cup race. It in many ways acts as a franchise but differs from other sports leagues in that the teams do not have ownership in the league itself. The teams and NASCAR had been negotiating a new agreement for a couple of years to replace the one that expires at the end of the 2024 season. On the late afternoon/early evening of Sept. 6, the teams were sent a final NASCAR proposed agreement and given until midnight to sign it.
What are the teams asking for?
The lawsuit isn’t too specific about what the teams are asking for. They are asking for any relief necessary to restore competition and unspecified monetary damages.
What does Michael Jordan say?
The basketball icon told FOX Sports on Oct. 6 prior to the Talladega race: “I did it for the smaller teams as well. It’s not just me. I think everybody should have an opportunity to be successful in any business. My voice is saying that it hasn’t been happening. … Hopefully we [at both sides] can come to our senses and figure out something that can make sense for everybody.”
Michael Jordan says he hopes for a quick resolution to the lawsuit with NASCAR
What does NASCAR say?
Jim France and NASCAR President Steve Phelps, when approached by FOX Sports during the Talladega race weekend on Oct. 6, declined comment on the lawsuit. The sanctioning body has yet to issue a statement.
In a Sept. 18 letter to 23XI Racing, an exhibit in the court filings, Phelps wrote: “It appears after 2+ years of negotiations with Teams, both collectively and individually, compromise and concession on both sides up until the last minute, we firmly believe that we have come up with a document that is fair and equitable to the industry. … You suggest that NASCAR somehow has ‘monopoly power’ and that 23XI and other Teams ‘depend on [NASCAR] for a competitive opportunity’ and have been presented with a ‘take-it-or-leave-it offer.’ We feel — and our attorneys have confirmed — that this contention is misplaced — and similar types of claims have already been rejected by courts.”
What do other team owners say?
RCR owner Richard Childress: “I didn’t have a choice. We had to sign. I have over 400 employees, OEM [manufacturer] contracts, contracts with sponsors. I’ve got to take care of my team.”
Trackhouse owner Justin Marks: “It’s a wait-and-see game. It’s going to take a long time to take to get to any sort of point where we know what the future looks like. … For us, we just have to focus on Trackhouse. Ultimately, we got to a place where I was comfortable signing the contract. We did a great job the last couple of years building a viable business under the current arrangement and the new one will continue that in our standpoint.”
RFK Racing owner (and driver) Brad Keselowski: “We’re always going to be fighting over a piece of the pie. … I just want peace. I want our entire industry to become laser-focused on growing the sport and creating incentives where we all win when that happens.”
What do drivers say?
Kyle Larson (Hendrick Motorsports): “We’re probably one of the only sports, if not the only sport, that athlete salary has gone down in the last couple of decades. Where you look at, clearly, most athletes’ salaries are going up — not just athletes but coaches, staff members, everybody. Obviously we would love to see it trend upward instead of the opposite, which it’s been, but I think with that, the teams probably have to make a lot more money to make it viable to pay the people that are working for the organizations.”
Joey Logano (Team Penske): “Does it affect me? I’m sure someway, somehow, someday, it probably will. But at the moment, there’s nothing I can do either way. So I’m just kind of letting it roll and see how the cards fall and see what happens.”
Michael McDowell (Front Row): “Bob Jenkins is so dedicated to this sport. … He has spent millions and millions and millions and millions and millions of his own dollars to be in this sport and to be competitive. Nobody does that unless they’re insane or super passionate. Bob is very passionate.”
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Who are the lawyers?
The teams’ main attorney is Jeffrey Kessler, who is known for representing NCAA athletes in their quest to earn money from their name, image and likeness. He also has represented U.S. women’s national team players in their quest for equal pay. He also represented Tom Brady during “Deflategate.”
NASCAR is represented by Chris Yates, a noted attorney who has represented the U.S. Soccer Federation, the UFC, World Aquatics, Fanatics, the Atlantic Coast Conference and the Hollywood Foreign Press Association.
Who is the judge?
The judge is Frank Whitney, who was appointed to the bench in 2006. He is a former Army reservist, a military intelligence officer, and spent 15 years as a federal prosecutor in North Carolina. As far as racing cases, he currently is the judge in a Video Privacy Protection Act class action lawsuit against NASCAR. He also has presided over BK Racing owner Ron Devine’s lawsuit against the bankruptcy trustee over whether he owes money to the former team’s bankruptcy estate. Magistrate judge Susan Rodriguez, who would handle certain motions in the case, is the magistrate for the data privacy case and also recently presided over a breach of contract trial between Front Row owner Bob Jenkins and Devine and BK Racing co-owner Michael DiSeveria over who was responsible to pay for liens on a charter FRM bought from BK.
How long could this take?
This case could settle at any time. But it could take two years or more if it went to trial. And then any appeal could take a year or more. And if there are decisions that could merit an appeal before the case continues toward trial, it could take even longer.
Will the teams win?
There is no question NASCAR controls many aspects of the sport. It has faced antitrust actions twice over the last 25 years, but those complaints came from racetracks that wanted Cup races (NASCAR prevailed in one, settled the other). The key for the teams is to get past what most likely will be a motion to dismiss (where NASCAR would ask the judge to rule that it didn’t violate the law even if everything the race teams allege is true) before discovery occurs. If NASCAR fails to persuade the judge to throw out the case, the teams would get to look at NASCAR’s books and emails, which would then give them the opportunity to find any egregious acts that discourage competition. It is possible that alone would push NASCAR to settle.
Will NASCAR win?
NASCAR leadership could argue that they gave teams a charter agreement to help them and were under no obligation to do so — and that there could be more competition if there was no charter agreement whatsoever because no one would be guaranteed a spot in the field. They could argue that they don’t stifle competition because there are other stock-car series, albeit on a smaller scale (such as the CARS tour), or other racing series that teams could compete in. And they could argue against the premise that they are legally required to have premier racing teams competing in their events.
And what would be the potential outcomes?
That is the biggest question. The teams appear to want their preferred terms of the charter deal — they would like to see permanent charters, more of a say in the governance of the sport and more control of their intellectual property than what is in the 2025 charter agreement. But there could be other/different changes that address the antitrust issues. Could NASCAR be required to sell the tracks, and if so, who would buy them, and how would that address the teams’ issues? Could NASCAR change clauses in the charter agreement that don’t necessarily deal with revenue awarded to the teams but which satisfy the legal issues and would then force the teams to potentially see if another major stock-car series could be developed? That is what gives this case the potential to have a major impact on the future of the sport.
Bob Pockrass covers NASCAR for FOX Sports. He has spent decades covering motorsports, including over 30 Daytona 500s, with stints at ESPN, Sporting News, NASCAR Scene magazine and The (Daytona Beach) News-Journal. Follow him on Twitter @bobpockrass.
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This article was originally published at www.foxsports.com
