23XI Racing and Front Row Sue NASCAR, Demand Charter Rights \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ 23XI Racing and Front Row Motorsports are suing NASCAR over its charter system, alleging antitrust violations. They seek a preliminary injunction to compete next season under the charter model while their case proceeds in court. The teams, owned by Michael Jordan, Denny Hamlin, Curtis Polk, and Bob Jenkins, argue that NASCAR’s current system limits competition. Both teams refused to sign the new charter agreement, accusing NASCAR of monopolistic practices. A hearing is set for October 16 as the teams push for access to internal NASCAR documents.
NASCAR Lawsuit: Quick Looks
- 23XI Racing and Front Row Motorsports are suing NASCAR for alleged monopolistic practices under the charter system.
- The teams are seeking a preliminary injunction to continue competing under the charter model while their antitrust case progresses.
- NASCAR’s charter system is a revenue-sharing model, similar to sports franchises, but with restrictive contract terms that the teams challenge.
- A hearing is scheduled for October 16 in federal court in Charlotte, where the teams hope for expedited discovery from NASCAR executives.
- The lawsuit could impact the future structure of NASCAR, including how teams acquire charters and the broader economics of the sport.
Deep Look:
The ongoing legal battle between 23XI Racing and Front Row Motorsports against NASCAR took another significant step forward on Wednesday as the two teams sought a preliminary injunction in federal court. The teams aim to challenge NASCAR’s charter system, which they claim imposes monopolistic restrictions that limit competition and bind teams to the series in an unfair manner. As the case moves through the courts, 23XI and Front Row are asking for permission to compete under the current charter system during the 2024 season while the antitrust lawsuit unfolds.
Teams File Lawsuit to Fight Charter Restrictions
The lawsuit, filed in the Western District of North Carolina, accuses NASCAR of monopolistic behavior and cites the restrictive nature of its charter system, which is a revenue-sharing model that operates similarly to franchises in other professional sports. While charters can be bought, sold, and leased, the system includes contractually binding terms with expiration dates, and NASCAR holds the authority to revoke these charters.
23XI Racing, co-owned by Michael Jordan, Denny Hamlin, and Curtis Polk, and Front Row Motorsports, owned by Bob Jenkins, were the only teams out of the 15 involved to refuse to sign the newest charter agreements, which will run through 2031. The teams argue that NASCAR’s refusal to consider making charters permanent, along with other restrictive clauses, limits their competitive opportunities and unfairly binds them to the sport’s governing body.
At the core of the issue is the teams’ contention that NASCAR’s latest charter agreement, which begins next season, includes terms that restrict the teams’ ability to challenge NASCAR legally. Specifically, the agreement prevents teams from suing NASCAR—a clause 23XI and Front Row hope to nullify through a preliminary injunction. The lawsuit also suggests that NASCAR presented the charter agreements as a “take-it-or-leave-it” proposition, effectively forcing teams to comply under the threat of losing their charters.
Hearing Scheduled for October 16
A hearing has been scheduled for October 16 in federal court in Charlotte, North Carolina, to discuss the teams’ motion for a preliminary injunction. The judge has ordered NASCAR to respond to the teams’ motion for expedited discovery by Friday and to the motion for a preliminary injunction by Monday. Should the court grant the injunction, 23XI and Front Row will be able to operate under the charter system while their antitrust case proceeds.
Both teams have retained Jeffrey Kessler, a prominent antitrust attorney known for representing players in the four major North American sports leagues. Kessler has argued that if the court strikes down the clause prohibiting lawsuits, the teams would sign the 2025 charter agreements. This would allow them to compete under the current system while the lawsuit against NASCAR continues.
“A court order will prevent (NASCAR) from enforcing that release term, and that way we can compete with the charters while we litigate against you going forward,” Kessler told The Associated Press. “We would sign them if they cannot enforce the antitrust release. If we don’t win the motion, then (the teams) will have to compete open.”
Potential Financial Losses for Front Row and 23XI
For both 23XI Racing and Front Row Motorsports, failing to secure the charters could result in significant financial losses. According to Bob Jenkins, Front Row stands to lose a combined $45 million in revenue if they are forced to compete as un-chartered teams. Despite the risks, Jenkins believes the teams have a strong case against NASCAR’s charter system and that pursuing the lawsuit is worth the potential short-term losses.
“We’re pretty confident about this lawsuit or we wouldn’t be doing it,” Jenkins said. “There’s a lot of money out there. I’m hoping NASCAR won’t fight the injunction and we can move forward.”
The lawsuit comes after months of escalating tension between the teams and NASCAR, particularly regarding how charters are distributed and the economic model teams must follow to remain competitive. Curtis Polk, co-owner of 23XI and a longtime business associate of Michael Jordan, pointed to the restrictive economic structure as a key issue that led to the lawsuit. He emphasized that the charter system enabled NASCAR to make a “take-it-or-leave-it” offer to teams under threat of losing their charters.
NASCAR Defends Charter System
While NASCAR has remained largely silent on the lawsuit itself, documents filed in court included communications between NASCAR President Steve Phelps and the 23XI ownership group, including Jordan and Hamlin. Phelps defended the charter system in a letter to the team, stating that the agreements were reached after more than two years of negotiations and were ultimately fair to all parties involved.
“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,” Phelps wrote.
NASCAR’s charter system has been in place since 2016, when it was introduced as a way to provide more financial stability to teams through revenue sharing and guaranteed race spots. However, the system has also sparked debates over whether it gives NASCAR too much control over teams and restricts their ability to explore other business ventures or racing series.
Expedited Discovery Sought from NASCAR Executives
As part of the lawsuit, 23XI Racing and Front Row Motorsports are seeking expedited discovery of documents from six NASCAR executives, including members of the France family, which founded and continues to run NASCAR. The teams are also asking for documents from Phelps, Steve O’Donnell (Chief Operating Officer), and Scott Prime (Senior Vice President of Global Strategy).
The lawsuit further demands information related to NASCAR’s acquisition of International Speedway Corporation (ISC) and the Automobile Racing Club of America (ARCA), as well as contracts between NASCAR and racetracks that have hosted Cup Series races since 2016.
According to Kessler, NASCAR’s dominant control over the sport is not due to its “superior skill or business acumen,” but rather through “exclusionary acts and restrictive agreements” that limit competition. Kessler believes the discovery process will reveal NASCAR’s anticompetitive practices, bolstering the teams’ request for a preliminary injunction.
The Road Ahead for 23XI and Front Row Motorsports
Both 23XI Racing and Front Row Motorsports have reiterated their intention to compete in 2025 with or without the charters. They currently field two cars each in the Cup Series and have plans to expand to three-car teams next season. The teams are pursuing the purchase of additional charters, including deals with Stewart-Haas Racing.
As the case moves forward, the outcome could have wide-reaching implications for how NASCAR operates its charter system and the broader business model within the sport. With Tyler Reddick of 23XI leading the way as the regular-season champion and both Reddick and Denny Hamlin (driving for Joe Gibbs Racing) still in contention for the Cup Series title, the teams remain focused on competing at the highest level despite the ongoing legal battle.
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