NASCAR Teams and the Legal Battle for Participation Charters
Two NASCAR teams, one of which is owned by NBA Hall of Famer Michael Jordan, presented arguments before a federal judge on Tuesday. The goal is to obtain a preliminary injunction that recognizes them as charter organizations until their antitrust lawsuit against the racing series is resolved. The 11-page presentation was made in response to NASCAR’s notification to Judge Kenneth Bell, stating that it would not redistribute any letters to new participants while the case heads towards its December 1 deadline. NASCAR’s decision 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 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 spot on the 40-car grid each week, as well as a significantly larger portion of the payments. NASCAR, after more than two years of tense negotiations, presented the teams with its final offer on charter extensions 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 charter participants for this season, until a jury verdict was issued on the antitrust allegations. That order 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 a charter.
Teams have also appealed for their charter status to be reinstated, but NASCAR argued in court last week that it has a buyer interested in one of the six charters previously held by 23XI and FRM, and plans to begin redistributing the charters immediately. NASCAR backtracked after Thursday’s hearing, and Bell is expected to issue a decision 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 argued 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 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 they are in breach. Kessler also argued that the fact that NASCAR agrees not to redistribute any charters now “does not negate the plaintiffs’ motion for a preliminary injunction nor eliminate the plaintiffs’ irreparable harm if relief is not provided.” The 13 teams holding participation letters are becoming frustrated with the case; Bell warned last week that the entire participation letter system risks collapse if an agreement is not reached, and the teams 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 motorsports 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 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 also said he would like to see NASCAR reach an agreement with 23XI and FRM.
