23XI Racing and Front Row Motorsports Battle for NASCAR Charter Status
Two NASCAR teams, one owned by NBA legend Michael Jordan, presented arguments before a federal judge on Tuesday. They seek a preliminary injunction to be recognized as charter organizations while their antitrust lawsuit against the racing series continues.
The 11-page filing before the United States District Court for the Western District of North Carolina responds to NASCAR’s notification to Judge Kenneth Bell. NASCAR reported that it would not redistribute any letters to new participants while the case moves toward the December 1 trial date. NASCAR’s decision came one day after a heated 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 three-time Daytona 500 winner Denny Hamlin, along with Front Row Motorsports, owned by businessman Bob Jenkins, are suing NASCAR over antitrust claims related to the charter system. A charter is equivalent to a franchise and guarantees charter cars a place on the 40-car grid each week, as well as a significantly larger share of payments.
NASCAR, after more than two years of contentious negotiations, presented its final offer to the teams on charter extensions last September. 13 organizations signed the agreements, but 23XI and Front Row refused.
Initially, the two teams won a preliminary injunction to be recognized as charters for this season, pending a jury verdict on the antitrust allegations. That was overturned, and 23XI and FRM currently compete as “open” teams. NASCAR wants to recover the money that was paid to the teams during the part of the season in which they had charters.
Teams have also appealed for charter status to be reinstated, but NASCAR argued in court last week that it has an interested buyer for one of the six charters previously held by 23XI and FRM, and plans to begin redistributing the charters immediately. NASCAR backed off after Thursday’s hearing, and Bell is expected to issue a ruling on the preliminary 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 argued on Tuesday that the threat still exists “due to the risk of claims for breach of contract from 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 charter. Jeffrey Kessler, the lawyer for both teams, indicated in court that Reddick has notified 23XI that it is in breach.
Kessler also argued that the fact that NASCAR agrees not to redistribute any charter now “does not negate the plaintiffs’ motion for a preliminary injunction nor eliminate the plaintiffs’ irreparable harm if relief is not provided.”
The 13 charter teams are getting frustrated with the case. Bell warned last week that the entire charter system risks collapsing if an agreement is not reached, and the teams that are not suing believe 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.
