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. The goal is to secure a preliminary injunction that recognizes them as chartered organizations until their antitrust lawsuit against the racing series concludes.
The 11-page document, filed in the U.S. District Court for the Western District of North Carolina, responds to NASCAR’s notification to Judge Kenneth Bell. The racing series indicated that it would not redistribute any charter to new entrants while the case heads towards the December 1 deadline.
NASCAR’s change of stance on Friday came a day after a controversial hearing. In this hearing, emails and text messages with explicit language from Jordan and other high-profile plaintiffs were revealed.
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, are suing NASCAR for antitrust claims related to the charter system. A charter is equivalent to a franchise, guaranteeing charter cars a place in the weekly race and a significant portion of the payments.
After more than two years of negotiations, NASCAR presented its final offer on charter extensions to the teams last September. 13 organizations signed the agreements, but 23XI and Front Row refused.
Initially, the two teams obtained a preliminary injunction to be recognized as charters for this season. This was revoked, and currently 23XI and FRM compete as “open” teams.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 also appealed to have their charter status reinstated, but NASCAR argued in court that it has a buyer interested in one of the six charters previously held by 23XI and FRM, and plans to redistribute the charters 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 charters, 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 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 it is in breach.
Kessler also argued that NASCAR’s agreement not to redistribute any charter now “does not moot 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. The teams that are not suing believe their valuations are being harmed 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 was ‘¿How can we help?'”, Towriss said at IndyCar’s season finale last weekend. “What we saw [in court], what was revealed in that case, is very inconsistent with what they [NASCAR] say in private. And therefore, 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 also said he would like to see NASCAR reach an agreement with 23XI and FRM.
