23XI Racing and Front Row Motorsports Battle for NASCAR Charters
In a recent legal battle, two NASCAR teams, one of them owned by NBA legend Michael Jordan, have presented arguments before a federal judge. The goal is to secure a preliminary injunction that allows them to be recognized as organizations with statutes until their antitrust lawsuit against the racing series is resolved.
The 11-page document, filed in the U.S. District Court for the Western District of North Carolina, is a response to NASCAR’s notification to Judge Kenneth Bell. The racing series reported that it will not redistribute any statutes to new participants while the case heads towards its December 1 deadline.
NASCAR’s decision came after a tense hearing that included the disclosure of emails and text messages with explicit language from Jordan and other high-profile plaintiffs.
23XI Racing, the team owned by Jordan and Denny Hamlin, three-time Daytona 500 winner, along with Front Row Motorsports, owned by Bob Jenkins, are suing NASCAR for antitrust claims related to the charter system. A charter is similar to a franchise and guarantees charter cars a place in the race each week, as well as a significantly larger share of payments.
After more than two years of negotiations, NASCAR presented its final offer on statute extensions to the teams last September; 13 organizations signed the agreements, but 23XI and Front Row refused.
Initially, the two teams obtained a restraining order to be recognized as teams with charters for this season until a jury verdict was issued on the antitrust allegations. That measure was revoked, and currently 23XI and FRM compete as “open” teams. NASCAR wants the money paid to the teams during the part of the season in which they had charters to be returned.
The teams have also appealed for their charter status to be restored, but NASCAR argued in court that it has a buyer interested in one of the six charters previously held by 23XI and FRM, and plans to begin redistributing the charters immediately. NASCAR backtracked after Thursday’s hearing, and Bell is expected to issue a ruling on the injunction this week.
NASCAR maintains that by refraining from redistributing the charters, 23XI and FRM are no longer at risk of irreparable harm. The teams responded that the threat still exists “due to the risk of claims for breach of contract from their invaluable drivers and the loss of sponsors in the absence of charter rights.”
Tyler Reddick, from 23XI, has a clause in his contract that states the team will be in breach if his Toyota doesn’t have a statute. Jeffrey Kessler, the lawyer for both teams, indicated in court that Reddick has notified 23XI that it is in breach.
Kessler also argued that NASCAR’s acceptance of not redistributing any statute now “does not negate the Plaintiffs’ Motion for a Preliminary Injunction nor eliminate the Plaintiffs’ irreparable harm if relief is not provided.”
The 13 teams with statutes are becoming frustrated with the case, and Judge Bell warned that the entire statute system risks collapsing if an agreement is not reached. The non-plaintiff teams believe that their valuations are being affected by the litigation.
Dan Towriss, the majority owner of the NASCAR team Spire Motorsports, as well as owner of Cadillac F1, Andretti Global and other motorsport properties, said he was “very disappointed with the direction” the lawsuit has taken.
Towriss also said he would like to see NASCAR reach an agreement with 23XI and FRM.
