23XI Racing and Front Row Motorsports Seek Legal Protection in Dispute with NASCAR
Two NASCAR teams, one owned by NBA legend Michael Jordan, presented arguments before a federal judge on Tuesday. The request seeks a preliminary injunction to be recognized as franchise-status organizations, as their antitrust lawsuit against the racing series continues. The 11-page filing in the U.S. District Court for the Western District of North Carolina was in response to NASCAR’s notification to Judge Kenneth Bell. The racing series indicated that it would not redistribute any franchise to new entrants while the case moves toward its December 1 trial date. NASCAR’s decision on Friday came a day after a heated hearing that included the disclosure of emails and text messages with offensive 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 businessman Bob Jenkins, is suing NASCAR for antitrust claims related to the franchise system. A franchise is the equivalent of a franchise and guarantees franchised cars a place in the 40-car field each week, as well as a significantly larger portion of the payments. NASCAR, after more than two years of contentious negotiations, presented its final offer to the teams on franchise extensions last September. 13 organizations signed the agreements, but 23XI and Front Row refused.The two teams initially obtained a preliminary injunction to be recognized as franchisees for this season until a jury verdict on the antitrust allegations. That was overturned, and 23XI and FRM are currently competing as “open” teams. NASCAR wants to recoup the money that was paid to the teams during the portion of the season in which they were franchised.
Teams have also appealed for franchise status to be reinstated, but NASCAR argued in court last week that it has a buyer interested in one of the six franchises previously held by 23XI and FRM, and plans to begin redistributing the franchises immediately. NASCAR backtracked 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 franchises, 23XI and FRM are no longer at risk of irreparable harm. The teams responded on Tuesday that the threat still exists “due to the risk of claims for breach of contract by their irreplaceable drivers and the loss of sponsors in the absence of franchise 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 franchise. 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 reallocate any franchise now “does not moot the plaintiffs’ motion for a preliminary injunction nor eliminate the plaintiffs’ irreparable harm if relief is not provided.” The 13 franchised teams are getting frustrated with the case. Bell warned last week that the entire franchise 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. “We had meetings with NASCAR’s top brass a few weeks ago and it’s ‘How can we help?'”, Towriss said at last weekend’s IndyCar season finale. “What we saw [in court], what was revealed in that case is very inconsistent with what they [NASCAR] say in private. And so I need to understand, ‘Who am I dealing with? What is it? Is it the people we meet with in private, or is it what they say when we’re not present?'” Towriss said he would also like to see NASCAR reach an agreement with 23XI and FRM.
