NASCAR Teams Seek Charter Recognition in Legal Battle
Two NASCAR teams, one of which is owned by NBA legend Michael Jordan, presented arguments before a federal judge on Tuesday. The goal is to obtain a preliminary injunction that recognizes them as chartered organizations until their antitrust lawsuit against the racing series is resolved. The 11-page filing in the United States District Court for the Western District of North Carolina was in response to NASCAR’s notification to Judge Kenneth Bell. The racing series reported that it would not redistribute any charter to new entrants while the case moves toward its December 1 deadline. NASCAR’s change of stance on Friday came a day after a contentious 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 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 the equivalent of a franchise and guarantees charter cars a place in the 40-car field each week, as well as a significantly larger share of payments. NASCAR, after more than two years of contentious negotiations, presented teams with its final offer on charter extensions last September. 13 organizations signed the agreements, but 23XI and Front Row refused.The two teams initially won a preliminary injunction to be recognized as charters 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 had charters.
The teams have also appealed for the 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 immediately begin redistributing the charters. 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 charters, 23XI and FRM are no longer at risk of suffering 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 charter rights”. Tyler Reddick, from 23XI, has a clause in his contract stating that 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 they are 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 imploding 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.Towriss said he would also like to see NASCAR reach an agreement with 23XI and FRM.“We had meetings with the NASCAR bosses a few weeks ago and it was ‘¿How can we help?’ 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? Are they the people we meet with in private, or is it what you say when we’re not around?'”
Dan Towriss
