23XI Racing and Front Row Motorsports Battle for NASCAR Charters in Federal Court
In an unexpected turn of events, two NASCAR teams, including one owned by NBA legend Michael Jordan, presented arguments before a federal judge. The dispute centers on the request for a preliminary injunction to be recognized as organizations with statutes, while the antitrust lawsuit against the racing series continues. 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 communicated that it would not redistribute any statute to new participants while the case moves towards the December 1 deadline. The 23XI Racing team, owned by Jordan and Denny Hamlin, along with Front Row Motorsports, led by Bob Jenkins, are suing NASCAR for antitrust claims related to the charter system. These charters, equivalent to franchises, guarantee cars a place on the 40-car grid each week, as well as a significant portion of the payments. After two years of negotiations, NASCAR presented the teams with its final offer on the extension of the statutes last September. Thirteen organizations signed the agreements, but 23XI and Front Row refused.Initially, the two teams obtained a precautionary measure to be recognized with charters for this season. This decision was revoked, and they are currently competing as “open” teams. NASCAR seeks to recover the money paid to the teams during the part of the season in which they had charters.
The teams have appealed for their charter status to be reinstated, but NASCAR argued in court that it has an interested buyer for one of the six charters previously held by 23XI and FRM, and plans to redistribute the charters immediately. Following the hearing, Judge Bell is expected to issue a ruling on the injunction this week. NASCAR argues that by delaying the redistribution of charters, 23XI and FRM are no longer at risk of irreparable harm. The teams responded that the threat persists “due to the risk of claims for breach of contract by their irreplaceable 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 would 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 agreement not to redistribute any statute now “does not moot the plaintiffs’ motion for injunctive relief nor eliminate the plaintiffs’ irreparable harm if relief is not provided.” The 13 teams with statutes are frustrated with the case, and Judge Bell warned that the entire statute system risks collapsing if an agreement is not reached. The teams that are not suing believe that their valuations are affected by the litigation. Dan Towriss, majority owner of NASCAR’s Spire Motorsports team, expressed his disappointment with the direction the lawsuit has taken. Towriss also stated his desire for NASCAR to reach an agreement with 23XI and FRM.
