Key Legal Victory for 23XI Racing and Front Row Motorsports in Legal Battle with NASCAR
A federal judge issued a crucial decision on Tuesday, granting a significant victory to 23XI Racing, owned by Michael Jordan, and Front Row Motorsports, in the antitrust litigation against NASCAR. This resolution puts further pressure on the organization to reach a settlement in the legal dispute. NASCAR commissioner Steve Phelps had stated last week that the series is “doing everything possible” to resolve the federal antitrust lawsuit, in what were the most extensive comments to date from the defendants. United States District Judge Kenneth Bell ruled in favor of 23XI, owned by Jordan and Denny Hamlin, three-time Daytona 500 winner, and Front Row, owned by Bob Jenkins. The ruling was based on a discussion about the market definition of “premier stock-car racing.” Bell determined that NASCAR controls the market, invalidating NASCAR’s argument that teams can compete in other series.This statement was supported by the expert opinion of Dr. Daniel Rascher, who concluded that “top-level stock-car racing” is a distinct form of automobile racing, different from others such as Formula 1 and IndyCar, as well as lower levels of stock-car racing, which are not equivalent substitutes for NASCAR. NASCAR, in a countersuit, accused the teams of illegally conspiring by joining together to negotiate new franchise agreements. However, Bell determined that NASCAR “deliberately, clearly, and unequivocally” alleged that the relevant market is “the market for the entry of cars in NASCAR Cup Series races in the United States and anywhere else a Cup Series race is held.”The teams argued that the relevant market for top-tier stock-car racing teams is where “the NASCAR Cup Series is currently the only buyer”.
23XI Racing and Front Row Motorsports
The lawsuit was filed a year ago by 23XI Racing and Front Row Racing, being the only two organizations out of a total of 15 that did not sign extensions to the new franchise agreements. These new agreements were presented to the teams at the beginning of the 2024 playoffs, with a deadline for their signature. This came after more than two years of tense negotiations over the franchises, which are fundamental to NASCAR’s business model, as they guarantee income and access to weekly races. 23XI and Front Row would likely go bankrupt without them and are competing this season without a franchise, which entails a significant reduction in prize money. Other teams have requested an agreement to move forward, but mediation sessions and private negotiations have not worked. The trial is scheduled for December 1st.The same transaction, the sale and purchase of top-tier stock-car racing services, cannot be a different relevant market depending on which party is complaining.
Judge Kenneth Bell
NASCAR, in its own statement, highlighted its commitment to building NASCAR as the premier motorsports series in the United States since its founding in 1948. Phelps did the same last week, reading a statement of more than six minutes; he defended the France family, based in Florida, who founded and controls NASCAR and most of the tracks that the series uses for its events.We are very pleased with the Court’s decision today, which ruled in our favor. Not only does it deny NASCAR’s request for summary judgment, but it also grants our request for partial summary judgment, determining that NASCAR has monopoly power in a properly defined market.
Jeffrey Kessler, attorney for 23XI and Front Row
NASCAR hopes to demonstrate that it became the leading motorsport in the United States through hard work, risk-taking, and many significant investments over the past 77 years. Antitrust laws encourage this, and NASCAR has done nothing anticompetitive by building the sport from the ground up since 1948.
NASCAR Statement
Most of the organizations that did sign the new franchise agreements last year filed statements with the court in support of the franchise system and asking for a settlement in the case. All teams want the franchises to be permanent, something NASCAR did not concede during the current agreement negotiations.
If an agreement is not reached before the trial and NASCAR loses, the entire franchise system risks being dismantled or revised. The teams are frustrated by that threat, and it is understood that NASCAR has agreed to make the franchises permanent and the obstacle in the agreement talks is the amount of money that 23XI and Front Row are demanding in damages and legal fees.
Teams are concerned that the entire NASCAR framework could be destroyed by a loss and are upset because it would be due to the monetary demands made by 23XI and Front Row. Bell issued another win last week for 23XI and Front Row when he dismissed NASCAR’s counterclaim against Curtis Polk, Jordan’s longtime business manager and one of the owners of 23XI.
