23XI Racing and Front Row Motorsports Battle for Their Charters in NASCAR
Two NASCAR teams, one owned by NBA Hall of Famer Michael Jordan, argued before a federal judge why they should be issued a preliminary injunction to be recognized as chartered organizations until their antitrust lawsuit against the stock car racing series is concluded. 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 that it would not redistribute any letters to new entrants while the case heads toward its December 1 hearing date. NASCAR’s backing down on Friday came a day after a bitter hearing that included the disclosure of emails and text messages laden with profanity from Jordan and other high-profile plaintiffs. 23XI Racing, the team owned by Jordan and three-time Daytona 500 winner Denny Hamlin, and Front Row Motorsports, owned by businessman Bob Jenkins, are suing NASCAR over antitrust claims regarding the charter system. A charter is the equivalent of a franchise and guarantees chartered cars a place in the 40-car field each week, as well as a significantly larger share of payments. NASCAR, last September, after more than two years of controversial negotiations, presented the teams with its final offer on the charter extensions; 13 organizations signed the agreements, but 23XI and Front Row refused. The two teams initially obtained a preliminary injunction to be recognized with a charter for this season until a jury verdict on the antitrust allegations. That was overturned, and 23XI and FRM currently compete as “open” teams. NASCAR wants the money paid to the teams during the portion of the season in which they had a charter to be returned. The teams have also appealed for the 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 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 in danger of suffering irreparable harm. The teams responded on Tuesday that the threat still exists “due to the risk of claims for breach of contract from 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 it is in breach. Kessler also argued that the fact that NASCAR agrees not to redistribute any charters now “does not moot the plaintiffs’ motion for a preliminary injunction nor eliminate the plaintiffs’ irreparable harm if relief is not provided.” The 13 teams that have a letter are getting frustrated with the case, Bell warned last week that the entire letter system is in danger of imploding if an agreement is not reached, and the teams that do not sue believe that 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 motorsports 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 NASCAR’s top brass a few weeks ago and it’s ‘¿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 so I need to understand, ‘¿Who am I dealing with? What is it? Are the people we meet with in private, or is it what you say when we’re not around?'”
Dan Towriss
