23XI Racing and Front Row Motorsports are suing NASCAR for monopolistic practices
Two NASCAR teams, including one led by basketball icon Michael Jordan, accused NASCAR of having a monopoly in a joint antitrust lawsuit filed in federal court Wednesday morning.
23XI Racing, the team co-owned by Jordan and three-time Daytona 500 winner Denny Hamlin, joined Front Row Motorsports to allege that NASCAR and its CEO Jim France have used “anticompetitive and exclusionary practices” to “protect themselves enrich at the expense of the best stock car racing teams.”
“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,” Jordan said in a statement. “Today’s action shows that I am willing to fight for a competitive market where everyone wins.”
The disagreement stems from a longstanding dispute involving NASCAR’s so-called “charter system,” which is similar to racing team franchises. Having a charter guarantees a starting spot in all 36 NASCAR Cup Series points races, and charter teams will earn a share of the $1.1 billion a year in television money that NASCAR will collect through a new TV deal starting next year.
Teams have been trying for more than two years to negotiate an extension of the original 2016 charter agreement before it expires on Dec. 31, but NASCAR refused to give teams many of the concessions they sought — including making the charters permanent.
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Last month, after meeting with the teams individually, NASCAR told the owners that their offer was final – and the lawsuit claims that if enough teams did not sign it by midnight, NASCAR would have threatened to “eliminate the charter system altogether for 2025 and beyond .”
“They posed a very serious threat to us, so we had to respond seriously,” Hamlin said in an interview.
That response included 23XI (pronounced “23-11,” for Jordan’s old jersey number and Hamlin’s car number) and Front Row refusing to sign the proposed agreement and being the only two holdouts among the current 15 charter organizations.
Front Row owner Bob Jenkins and 23XI stand to lose their four combined charters entirely if the legal situation does not work out in their favor and the charters are sold for as much as $40 million.
“I don’t know what it’s going to cost me if I lose two charters on my race team, but it’s a lot of money,” Jenkins said in an interview. “But it’s the right thing to do. It’s the right thing for the sport.”
NASCAR had no immediate comment as it is reviewing the filing.
GO DEEPER
Why are 23XI and Front Row suing NASCAR? Here’s what you need to know
The teams claim that while even the winningest organizations struggle to break even, NASCAR has unlawfully blocked the formation or growth of any other series – forcing competitors “to accept the economic conditions” to participate to take.
Some of these allegedly illegally monopolistic practices include purchasing a majority of the nation’s top race tracks and granting NASCAR exclusivity to those venues; forcing other NASCAR-sanctioned racetracks to adhere to exclusivity agreements; purchasing NASCAR’s “only other recognizable stock car racing series competitor” (ARCA) in 2018; banning Cup teams from competing in other stock car races; and choosing exclusive third-party suppliers to sell cars and parts to racing teams, while retaining ownership of all cars and parts.
23XI and Front Row have retained attorney Jeffrey Kessler, whose legal victories include establishing the NFL Free Agency, implementing name, image and likeness agreements in college athletics and winning equal pay for the U.S. Women’s National Soccer Team include.
Kessler said The Athletics every major sport undergoes a transformation – “usually through the application of antitrust laws, sometimes through some other major transformative event.”
And this lawsuit, he said, “is NASCAR’s moment.”
“Someone had to stand up and say, ‘I’m not going to take it anymore,’” he said. “That’s what these two teams did.”
Curtis Polk, another co-owner of 23XI and Jordan’s longtime business partner, said in an interview that prosecutors are eager to discover where all the money actually goes within NASCAR (which would be required to open its books as part of the legal procedure, unless it regulates).
“We just want fairness,” Polk said. “It’s not about one particular topic or five specific issues. When you look at the financial inequality that exists here, how can anyone say that’s fair?”
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(Photo: Jared C. Tilton/Getty Images)
