A federal antitrust lawsuit accusing NASCAR of being a monopoly — with Michael Jordan’s race team as one of the plaintiffs — could have a dramatic impact on the most popular form of motorsport in the United States.
23XI Racing, co-owned by Jordan, along with Front Row Motorsports, alleged Wednesday that NASCAR and CEO Jim France “have used anti-competitive practices to prevent fair competition in the sport.”
The lawsuit is a culmination of two years of contentious negotiations between NASCAR and Cup Series teams over extending the so-called “charter” agreement, a franchise-like system that gives teams certain monetary guarantees, including a percentage of revenue distributed to teams through NASCAR’s recently announced media rights deal that extends through 2031.
Last month, 13 of 15 teams signed an extension to the charter agreement that was set to expire at the end of the year. That extension is for seven years with a seven-year option. 23XI and Front Row were the holdouts, with each ownership group outspoken that they wanted a better deal from NASCAR.
“Everyone knows that I have always been a fierce competitor and that will to win is what drives me and the entire 23XI team each and every week out on the track,” Jordan said in a statement. “I love the sport of racing and the passion of our fans, but the way NASCAR is run today is unfair to teams, drivers, sponsors and fans. Today’s action shows I’m willing to fight for a competitive market where everyone wins.”
Below, The Athletic’s Jeff Gluck and Jordan Bianchi sort through the issues and what it means going forward.
Who is involved in the lawsuit?
On the plaintiff side are 23XI Racing and Front Row Motorsports. 23XI’s ownership group includes Jordan, NASCAR star driver Denny Hamlin and Curtis Polk, Jordan’s longtime business partner. Front Row is owned by Bob Jenkins, a restaurant entrepreneur who owns many Taco Bell and Long John Silver’s franchises. Noted antitrust attorney Jeffrey Kessler is representing the two teams. Kessler has been involved in several landmark antitrust cases, including the creation of NFL free agency, the implementation of NIL deals in college athletics and winning equal pay for the U.S. women’s national soccer team.
The two defendants in the lawsuit are NASCAR and Jim France, NASCAR’s chairman and CEO. NASCAR is the premier motorsports sanctioning body in the United States, having promoted various forms of racing since its formation in 1948. France is the son of NASCAR founder Bill France Sr. and was named its CEO and chairman in 2018. The France family has controlled NASCAR for all of its 76-year history.
Why did 23XI and Front Row file this lawsuit?
After a two-year negotiation, NASCAR gave teams a take-it-or-leave-it offer on Sept. 6, two days before the opening race of NASCAR’s playoffs at Atlanta Motor Speedway. Multiple team owners told The Athletic that NASCAR presented teams with its final offer at approximately 5 p.m. ET with an initial one-hour deadline to accept before extending the deadline to midnight after owners pushed back.
Displeased with what they perceived as NASCAR’s lack of willingness to negotiate in good faith, along with the sudden deadline, 23XI and Front Row declined to sign. Because they did not sign the extension, the two teams are at risk of losing their charters, valued anywhere from $30 million to $50 million apiece, for nothing.
Among the things 23XI and Front Row are seeking in the lawsuit is an injunction to prevent NASCAR from taking the two charters each team holds.
“They made a very serious threat to us, so we had to react seriously,” Hamlin said in an interview.
What are 23XI and Front Row seeking to resolve in the lawsuit?
Due to the pending lawsuit, the plaintiffs were reluctant to state specifically what they would require to end the litigation. Throughout the charter negotiations, teams have maintained they had four “pillars” they wanted NASCAR to address. They sought an increase in revenue distributed to them from NASCAR’s new media rights deal, permanent charters to protect their investments should NASCAR later decide to eliminate the system, a voice in any rules decision that could unexpectedly raise operating costs, and a percentage of any revenue generated from new business opportunities.
“We can’t give you a specific, ‘This will do it.’ There must be significant change,” Kessler said. “No one is bringing this type of fight, this type of lawsuit, to move from a (Grade) D-plus deal to a D deal. That is not going to happen.
“If it’s going to get resolved before (a trial), it’s going to have to be because there’s real, meaningful change that gives these teams a fair chance to compete and earn a profit and invest in the sport and grow it.”
Why was Jim France named individually in the lawsuit in addition to NASCAR?
The France family and NASCAR have long been intertwined, with ownership of the company within the family’s control for the past 76 years. Such deep ties can make it difficult to separate the two parties, Kessler said.
“To go into a charade of saying that there’s a space between NASCAR and the France family? There is no such space,” Kessler said. “How they’ve run it, where the money is really going, how it’s extracted, how the monopoly is being abused — all of that is going to be part of our discovery of the case.”
As part of the “discovery” process in legal matters, all parties involved would be obligated to turn over their financial records. By naming France individually, he would also be required to disclose his income from NASCAR — something that has never been revealed.
As the court case plays out, will 23XI and Front Row continue to race?
In the first action the teams are taking, they are requesting a preliminary injunction from the court that would allow them to continue operating under the charter agreement while the legal process plays out.
The court in theory would grant an injunction by the end of the year — and thus before the current charters expire — which would then buy time for the case to work through the courts (or get settled before that).
“The idea of the injunction is to let these teams compete under charters without penalty while the case plays out, which will take about a year and a half or so,” Kessler said.
Tyler Reddick, who is still alive in NASCAR’s playoffs, and Bubba Wallace drive 23XI’s two chartered Cup cars. Michael McDowell and Todd Gilliland drive Front Row’s Cup cars.
Will other teams join the lawsuit?
It remains to be seen. As of Tuesday night, no other team had been informed of the pending litigation, Polk said.
Though teams have already signed the charter agreement, they could potentially make the case they did so under duress and attempt to join the suit.
Front Row’s Jenkins reiterated that he felt NASCAR essentially strong-armed teams into signing or else face potentially dire financial repercussions. He said he has since communicated with team owners who said they signed the agreement only because they felt like they had no choice.
“If you poll the owners in the sport, I can tell you overwhelmingly, they’re going to tell you that they did this under duress because there’s long-term sponsorship agreements, long-term driver agreements, (manufacturer) agreements, commitments to crew chiefs and engineers,” Jenkins said. “It takes a lot of courage, or stupidity, to say no at that point. You have six hours to sign a deal. In my case, I don’t know what it was gonna cost me if I lose two charters in my race team, but it’s a lot of money.
“And I know that some of those (owners), what they’ve said publicly and what they’ve sent to us, email and text privately, have been very different. So I don’t know if they’re just putting on their happy face for the media. But I can tell you, overwhelmingly, even the top-tier teams struggle to break even, and if somebody in the middle can figure out a way to make it work for them, I said it’s awesome for them, but I don’t think you can do it every single year.”
Are the other race teams pleased with the deal after signing?
“At the end of the day, the agreement is one that I can build a business around,” Trackhouse Racing owner Justin Marks told SiriusXM Radio after signing.
Rick Hendrick, owner of the powerhouse Hendrick Motorsports team, said last month he was “just tired” of the back-and-forth and felt the deal was as far as NASCAR would be willing to go.
“Not everybody was happy,” he said. “But in any negotiation, you’re not going to get everything you want. And so I felt it was a fair deal and we protected the charters, which was No. 1. We got the (revenue) increase. I feel a lot of things we didn’t like we got taken out. So I’m happy with where we were.”
However, some team owners had a different perspective than Hendrick, saying privately that they only signed because they felt like they had no choice but to do so, lest NASCAR pull their charters.
“They put a gun to our head and we had to sign,” one team owner, granted anonymity to speak freely about the contentious deal, told The Athletic. “It is what it is. We move forward.”
What is NASCAR’s response?
The sanctioning body has not commented publicly in months on the negotiations, nor has NASCAR said what would happen to 23XI and Front Row after they did not sign the renewed agreement.
NASCAR offered no immediate comment Wednesday as it reviewed the filing. It’s unclear if NASCAR was aware the legal action would be filed this week.
(Top photo of 23XI Racing co-owner Michael Jordan: Sean Gardner / Getty Images)
