Legal Dispute in NASCAR: Teams Seek Charter Recognition
In a legal battle shaking the world of motorsports, two NASCAR teams, one of them owned by NBA legend Michael Jordan, presented arguments before a federal judge. Their goal is to obtain a preliminary injunction that recognizes them as organizations entitled to a charter until their antitrust lawsuit against the racing series concludes. The 11-page document was filed in the United States District Court for the Western District of North Carolina. It responds to NASCAR’s notification to Judge Kenneth Bell, in which the organization announced that it would not redistribute any charter to new participants while the case heads towards the December 1 court date. NASCAR’s decision came after a tense hearing that included the disclosure of emails and text messages with offensive language, from Jordan and other high-profile plaintiffs. 23XI Racing, the team of Jordan and three-time Daytona 500 winner Denny Hamlin, along with Front Row Motorsports, owned by Bob Jenkins, are suing NASCAR for antitrust claims related to the charter system. A charter is equivalent to a franchise and guarantees charter cars a place on the 40-car grid each week, as well as a significantly larger share of payments. After more than two years of negotiations, NASCAR presented its final offer on charter extensions to the teams last September. Thirteen organizations signed the agreements, but 23XI and Front Row refused.Initially, the two teams obtained a preliminary injunction to be recognized as charter holders for this season, until a jury verdict was issued on the antitrust allegations. This was revoked, and currently 23XI and FRM compete as “open” teams.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 charters.
The teams have also appealed for the charter status to be reinstated, but NASCAR argued in court that it has an interested buyer for one of the six charters previously held by 23XI and FRM, and that it plans to begin redistributing the charters immediately. Judge 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 argued 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 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 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 frustrated with the case. Judge Bell warned that the entire charter system is in danger of collapsing if an agreement is not reached. The teams that are not suing believe that their valuations are being affected by the litigation. Dan Towriss, majority owner of NASCAR’s Spire Motorsports team, 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’s ‘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 said he would also like NASCAR to reach an agreement with 23XI and FRM.
