NASCAR Teams, including Michael Jordan’s, Fight for Franchise Status
In a legal battle shaking the world of motorsports, two NASCAR teams, one of them owned by NBA legend Michael Jordan, are embroiled in a legal dispute over their recognition as franchise status organizations.
23XI Racing, owned by Jordan and three-time Daytona 500 winner Denny Hamlin, and Front Row Motorsports, led by Bob Jenkins, filed a brief with the federal court outlining their arguments for maintaining franchise status. This 11-page document is a response to NASCAR’s notification to Judge Kenneth Bell regarding the non-redistribution of franchises as the case moves towards the December 1 court date.
The controversy centers on NASCAR’s franchise system, which guarantees teams a place on the starting grid of each race and a larger share of the profits. 23XI and Front Row Motorsports allege anti-competitive practices in relation to this system.
Last September, after tense negotiations, NASCAR presented its final offer for the franchise extension. Although 13 organizations signed the agreements, 23XI and Front Row refused.
Initially, the teams obtained a preliminary court order to be recognized as franchises this season, but this decision was overturned. Currently, they compete as “open” teams. NASCAR seeks to recover the money paid to the teams during the period in which they were recognized as franchises.
The teams have appealed for their franchise status to be reinstated, but NASCAR argues it has a buyer interested in one of the six franchises previously held by 23XI and FRM, and plans to redistribute the franchises immediately. After a heated hearing, NASCAR backed down, and a decision on the preliminary injunction is expected this week.
NASCAR argues that, by not redistributing the franchises, 23XI and FRM no longer suffer irreparable harm. The teams, for their part, argue that the threat persists “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 stating that the team would be in breach if his Toyota is not franchised. 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 Plaintiffs’ Motion for a Preliminary Injunction nor eliminate Plaintiffs’ irreparable harm if relief is not provided.”
The situation has generated frustration among the 13 franchised teams, and Judge Bell warned that the entire franchise system risks collapsing if an agreement is not reached. The teams not involved in the lawsuit believe their valuations are being harmed by the litigation.
Dan Towriss, majority owner of NASCAR’s Spire Motorsports team, expressed his disappointment with the direction the lawsuit has taken.
Towriss also expressed his desire for NASCAR to reach an agreement with 23XI and FRM.
