CHARLOTTE, N.C.: Retired NBA great Michael Jordan and his fellow owners of two NASCAR teams went to federal court Monday for a hearing in their antitrust fight against the stock car series over what they say is an unfair business model.
23XI Racing, which is owned by Jordan and three-time Daytona 500 winner Denny Hamlin, and Front Row Motorsports, owned by restaurant entrepreneur Bob Jenkins, sued NASCAR and chairman Jim France in October after months of tense negotiations over NASCAR’s charter system, which is essentially a franchise model that includes revenue sharing.
The two teams say NASCAR gave all Cup Series teams a last-minute, take-it-or-leave-it offer in September that both 23XI and Front Row refused to sign. The owners contend the charter system limits competition by unfairly binding teams to the series, its tracks and its suppliers, and they called the France family and NASCAR “monopolistic bullies.”
The two teams are represented by Jeffrey Kessler, the top antitrust lawyer in the country, who argued repeatedly they are only asking for a temporary injunction that allows them to compete without the clause that would prevent their ongoing lawsuit.
He said NASCAR has since rescinded the charter agreements offered to 23XI and FRM in September.
“We do not challenge the entire charter agreement. We want a return to status quo,” Kessler said. “We are not seeking a seven-to-14-year argument. Let us operate under the terms they offered for the duration of the (court) case and race under the charter terms for the duration of the case.”
Kessler said NASCAR is fighting the injunction because NASCAR does not believe it has a winnable case.
The fight is playing out as NASCAR heads into its championship weekend, with the title-deciding race set for Sunday in Phoenix with 23XI Racing’s Tyler Reddick among the four drivers who can win.
After a hearing that lasted nearly two hours, US District Judge Frank D. Whitney said he’d have a decision on 23XI and FRM’s request for a preliminary injunction to be recognized in 2025 as chartered teams by Friday — when cars hit the track in Phoenix to begin preparations for the title-deciding race.
Jordan listened to Kessler’s arguments from the front row of the gallery, and he leaned forward intently for the entirety of NASCAR’s case before the court.
In a brief comment outside court, Jordan said he didn’t think the legal battle would detract from 23XI’s effort to win the championship with Reddick.
“No, I’ve been in situations of disparity. I think the race team is going to focus on what they have to do this weekend, which I expect them to do,” Jordan said. “I think Jeffrey did an unbelievable job today, and I think I put all my cards on the table. I’m looking forward to winning a championship this weekend.”
At issue before the court is 23XI and FRM’s request to be released from a clause in NASCAR’s agreement that prohibits teams from suing the sanctioning body. Both teams have said they will operate as “open” teams in 2025 if they don’t receive the injunction, but even that agreement prevents them from suing NASCAR.
Also, an “open” team is not guaranteed a spot in the weekly 40-car field, does not receive the same amount of revenue as chartered teams, and its drivers and sponsors potentially could leave because they are associated with unprotected chartered teams.
The charter system began in 2016 and has now twice been extended, with the deals signed by 13 organizations set to run from 2025 through 2031.
Christopher Yates, of Latham & Watkins LLP, represented NASCAR and France. He said the teams have plenty of options outside of NASCAR.
“Mr. Jordan had a choice: They could invest in NASCAR, IndyCar, buy another NBA team,” Yates said, “but they chose to invest in NASCAR.”
Yates also disputed the notion that the 13 teams who signed the charter agreements 48 hours before the playoffs began in September did so under coercion, but he used slides that cherry-picked quotes that left out the parts where owners admitted to reporters that NASCAR threatened to kill the entire charter process if it did not receive signed agreements within a very short time period.
“We’re talking about Roger Penske, Rick Hendrick and Joe Gibbs — people who do not get pushed around,” Yates said.
Kessler called Yates’ synopsis a “complete distortion” of the facts.
Kessler also argued that the terms of the new charters potentially could put the two teams out of business, and cause Reddick to leave 23XI even if he wins the championship Sunday.
“We have a potential champion who would be free to leave and we’d never get him back,” Kessler said. “This could put these teams out of business. You can’t go to a stock car team and ask them to become a Formula 1 team.”
Whitney last week denied an expedited discovery request from 23XI and Front Row for NASCAR to produce documents prior to Monday’s preliminary injunction hearing.
“While the proposed discovery requests may help plaintiffs show a likelihood of success on the merits, they are not sufficiently narrowly tailored,” Whitney wrote.
Jordan, Hamlin and Curtis Polk of 23XI were joined by Jenkins and Front Row President Jerry Freeze for the hearing, which is crucial to how next season will proceed for the two teams.
The teams argue that NASCAR would not be harmed by the injunction because the series had planned to have 36 chartered teams and allowing them to compete as chartered teams while pursuing the lawsuit was maintaining the status quo.
NASCAR now says it plans to run 32 chartered teams and eight open cars (instead of four) in its 40-car field each week. Front Row and 23XI currently have two charters apiece that they did not sign, and both have deals with Stewart-Haas Racing to buy one charter each.
Those deals have not closed and NASCAR has indicated it won’t recognize the sales. NASCAR is alleging it is only honoring the 32 charter agreements that were signed in September.
NASCAR contends the two teams don’t meet the requirements for an injunction because they can still compete as open teams and that any damages that they suffer if they prevail in the case can be covered monetarily.
