23XI Racing co-owner Michael Jordan stands in the pit area during an April 21 NASCAR Cup Series race at Talladega Superspeedway.
Mike Stewart, AP File
CHARLOTTE, N.C. — Two NASCAR teams, including one owned by Michael Jordan, have initiated a federal antitrust lawsuit against the stock car series and its chairman, Jim France. The lawsuit, filed on Wednesday, contends that the new charter system restricts competition, unfairly tying teams to the series, its tracks, and its suppliers.
Both 23XI Racing and Front Row Motorsports lodged the suit in the Western District of North Carolina in Charlotte following two years of tense negotiations with the privately owned National Association for Stock Car Auto Racing and the 15 charter-holding organizations within the series’ premier Cup Series.
“The France family and NASCAR exhibit monopolistic behavior,” the teams claimed in their lawsuit, a copy of which was obtained by The Associated Press. “Bullies will persist in imposing their will to harm others until their targets refuse to be victims. That time has now come.”
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In early September, NASCAR put forth its final proposal regarding what is essentially a revenue-sharing model; thirteen organizations opted to sign, with most alleging that they were under duress or felt threatened in the process.
However, 23XI Racing, co-owned by Jordan and veteran driver Denny Hamlin, along with the smaller Front Row team, chose not to sign. They have engaged Jeffrey Kessler, a leading antitrust lawyer who has represented players across all four major professional North American sports, advocated for the NCAA’s shift towards compensating college athletes, and achieved a significant equal pay settlement for the members of the U.S. women’s national soccer team.
The lawsuit demands information from NASCAR and France “pertaining to their exclusionary practices and their intention to shield themselves from any competition.” Kessler mentioned that he intends to request a preliminary injunction, allowing the two teams to compete in 2025 under the new charter agreement as the litigation unfolds.
The teams plan to pursue treble damages for the anti-competitive terms that have dominated the sport since the inaugural charter agreement in 2016.
“It’s well known that I have always been a fierce competitor, and that drive to win propels me and the entire 23XI team each week on the track,” stated Jordan, the retired NBA superstar. “I have a deep love for the sport of racing and for our passionate fans, but the current management of NASCAR is inequitable to teams, drivers, sponsors, and fans alike. Today’s actions demonstrate my commitment to fighting for a competitive market where everyone can succeed.”
A spokesperson for NASCAR indicated that the series refrains from commenting on ongoing litigation. NASCAR operates out of Daytona Beach, Florida.
During last Sunday’s NASCAR Cup Series race at Kansas Speedway in Kansas City, Kan., Tyler Reddick (45) is seen changing his tires on pit road.
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Colin E. Braley, AP File
What is a charter?
Introduced in 2016, the charter system encompassed revenue sharing and additional components of the business for the premier motorsports series in the United States, ensuring that 36 entries would participate in each lucrative Cup Series race. Among the 19 team owners initially awarded charters in 2016, the lawsuit states that only eight remain active in the sport.
One notable team that exited was Furniture Row Motorsports, which sold its charter for $6 million at the end of the 2018 season, one year after clinching the Cup Series championship. The plaintiffs argue that this exemplifies how the charters left teams struggling to achieve profitability.
The original charters were valid from 2016 until 2020, automatically renewed to extend through December 31, 2024. As the expiration date approaches, teams have contended that the revenue sharing arrangement is inequitable and have sought a larger portion of the overall revenue.
Bob Jenkins, owner of Front Row Motorsports, emphasizes that he has yet to turn a profit since establishing his team in 2005. Although he celebrated a victory at the Daytona 500 in 2021 with driver Michael McDowell, he still did not break even during that successful season.
With four sons and a wish to leave a legacy for his family, Jenkins expressed the need for a fair agreement.
“Having been part of this racing community for 20 years, I couldn’t be prouder of the Front Row Motorsports team and our achievements. However, it’s time for change,” Jenkins remarked. “We require a system that is more competitive and equitable, where teams, drivers, and sponsors can be recognized for our collective investments by fostering long-term enterprise value, akin to the structure of every other successful professional sports league.”
What do the teams want?
In their negotiations, the teams requested increased revenue, a role in governance and rule-making, as well as a share of the income NASCAR generates from the names, images, and likenesses of the participants.
The teams sought permanence for the charters; however, France has declined this request.
The lawsuit indicates that NASCAR provided a take-it-or-leave-it proposal on September 6, just 48 hours prior to the start of the playoffs. It claims that NASCAR pressured teams into signing the extensive agreement or risk losing not only their charters but potentially the charter system itself, unless “a substantial number of teams” consented.
“The teams recognized that the costs of fielding a NASCAR car had escalated to the point where competing without the relatively modest revenue sharing and stability offered by the charter system would be financially disastrous for most, along with the“`html
negotiations. Both 23XI Racing and Front Row held their positions, yet their motivations remained ambiguous until the court filing on Wednesday.
What claims does the lawsuit make?
The lawsuit contends that NASCAR contravened the Sherman Antitrust Act by forbidding any stock car racing team from participating in the circuit “without accepting the anticompetitive terms” it enforces.
“Confronted with a take-it-or-leave-it offer, and lacking any alternative opportunity for premier stock car racing in the United States, most teams concluded they had no choice but to sign,” asserts the lawsuit. “One team described its agreement as ’coerced,’ while another expressed it was ‘under duress.’
“A third team remarked that NASCAR ‘put a gun to our heads’ and that they ‘had to sign.’ A fourth characterized NASCAR’s tactics as reminiscent of a ‘communist regime.’ All these teams opted not to disclose their identities publicly, fearing retaliation from NASCAR.”
How did it reach this point?
NASCAR was established in 1948 by the late Bill France Sr. It was initially managed by his son, Bill Jr., then his grandson, Brian France, and is currently led by France Sr.’s second son, Jim. Ben Kennedy, the son of Bill Jr.’s daughter, Lesa, is considered the likely successor to the family business.
The lawsuit claims that until 2016, NASCAR functioned under annual contracts that offered no long-term security for any team. There was no assured participation in any Cup Series event or guaranteed financial rewards, leading teams to rely on securing their own sponsorships.
This model rendered sustainability nearly impossible for owners who aimed to operate solely as racing teams without additional external business ventures. Pursuing sponsorship became a full-time endeavor, with teams frequently competing directly with NASCAR for financial opportunities.
According to the lawsuit, the teams experienced a “constant state of financial vulnerability,” which led to the failure of some of the most successful organizations. It cites NASCAR Hall of Famer Jimmie Johnson, who has largely retired from driving and is now a co-owner of a budding Cup Series team.
“According to NASCAR Hall of Famer Jimmie Johnson,” the lawsuit notes, “the best position to be in is NASCAR, the second-best is a driver, and the least desirable is a team owner.”
Denny Hamlin (11) is in the lead ahead of Chase Briscoe (14) and Christopher Bell (20) during the NASCAR Cup Series race held on September 21 in Bristol, Tennessee.
Wade Payne, AP File
Michael Jordan’s NASCAR Team Files Antitrust Lawsuit Against Series, Claiming Monopoly Practices
Overview of the Lawsuit
Recently, 23XI Racing, the NASCAR team co-owned by basketball legend Michael Jordan, has made headlines by filing an antitrust lawsuit against NASCAR and its president. The suit accuses the racing organization of engaging in anti-competitive practices that stifle competition within the sport. This legal action has drawn significant attention, not just for its high-profile ownership but also for its implications on the future of NASCAR.
Background on 23XI Racing
- Formation: 23XI Racing was founded in 2020 by Michael Jordan and Denny Hamlin, a veteran NASCAR driver. The team was established with the aim of increasing diversity in the sport and providing opportunities for underrepresented drivers.
- Team Performance: In its short history, 23XI Racing has quickly made a name for itself, securing notable finishes and drawing a significant fan base.
- Intellectual Property: The team’s name, 23XI, reflects Jordan’s iconic jersey number (23) and “XI,” representing the Roman numeral for 11, a nod to Hamlin’s racing number.
Key Claims in the Lawsuit
The lawsuit details several claims against NASCAR, including:
- Monopoly Practices: 23XI Racing argues that NASCAR’s operational structure effectively restricts competition, limiting the ability of new teams to thrive.
- Distribution of Revenue: The team claims that NASCAR’s revenue-sharing model is skewed in favor of established teams, making it increasingly difficult for newcomers to compete on a level playing field.
- Restrictive Regulations: 23XI Racing alleges that NASCAR imposes rules that disproportionately benefit certain teams, leading to an environment where innovation is stifled.
Implications for NASCAR
The allegations made by 23XI Racing could have far-reaching implications for the NASCAR series:
- Financial Impact: If the lawsuit succeeds, it could lead to significant changes in how revenue is distributed among teams, potentially benefiting smaller teams.
- Regulatory Changes: A ruling in favor of 23XI Racing might compel NASCAR to revise its regulations to promote fairer competition.
- Reputation Risk: The lawsuit could damage NASCAR’s reputation as an inclusive and competitive racing series, impacting sponsorships and fan engagement.
Benefits of a Competitive NASCAR Environment
Enhancing competition within NASCAR could lead to several benefits, including:
- Increased Fan Engagement: More competitive races often translate to higher levels of excitement and fan interest, drawing larger viewership and attendance.
- Diversity in Racing: As 23XI Racing aims to highlight diversity, a more inclusive environment can attract a broader audience, enriching the overall NASCAR culture.
- Innovation in Technology: With a level playing field, smaller teams are more likely to innovate, contributing to advancements in racing technology.
Potential Outcomes of the Lawsuit
The lawsuit could lead to several outcomes, which may include:
- Settlement: NASCAR might choose to settle the lawsuit out of court, leading to changes in their operational practices without a lengthy legal battle.
- Legal Precedent: Depending on how the court rules, this case could set a significant legal precedent regarding competition in sports leagues.
- Policy Revisions: NASCAR might revise its policies and practices to promote a more competitive environment, responding proactively to the lawsuit.
Case Studies: Antitrust Lawsuits in Sports
Other sports leagues have faced similar antitrust lawsuits, providing valuable insights into potential outcomes:
| Sport | Year | Outcome |
|---|---|---|
| NBA | 1981 | Settled, leading to changes in player contracts. |
| NHL | 1994 | Resulted in significant changes to salary cap regulations. |
| MLB | 1990 | Litigation led to a revised revenue-sharing model. |
First-Hand Experience: Insights from Team Owner Michael Jordan
Michael Jordan’s involvement in NASCAR has been transformative. Here are some insights from his perspective:
- Building a Legacy: Jordan emphasizes the importance of creating opportunities for minority drivers and fostering an inclusive racing culture.
- Competitive Spirit: His competitive nature drives a desire for fair competition, aligning with the principles of sportsmanship.
- Community Engagement: Through 23XI Racing, Jordan aims to connect with fans on a deeper level, promoting a community-focused approach to racing.
Practical Tips for Aspiring NASCAR Teams
Aspiring teams can learn valuable lessons from the situation involving 23XI Racing:
- Understand the Regulations: Familiarize yourself with NASCAR’s rules and structure to navigate the competitive landscape effectively.
- Build a Strong Network: Engage with other teams, sponsors, and fans to create a supportive community that can provide resources and insights.
- Focus on Innovation: Emphasize unique strategies and technologies to stand out in the competitive field.
Conclusion
The antitrust lawsuit filed by 23XI Racing against NASCAR represents a significant moment in the world of motorsports. As the legal process unfolds, it will be crucial to watch how it impacts the future of competition in NASCAR and what it means for aspiring teams looking to break into the sport.
