NASCAR Teams, including Michael Jordan’s, Seek to Maintain Franchise Status
Two NASCAR teams, one owned by NBA legend Michael Jordan, presented arguments before a federal judge. They seek a preliminary injunction to be recognized as franchise-right organizations until their antitrust lawsuit against the racing series concludes. The 11-page filing in the United States 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 franchise to new entrants while the case heads toward its December 1 trial date. NASCAR’s retraction on Friday came a day after a heated hearing that included the disclosure of emails and text messages with explicit language 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 related to the franchise system. A franchise is the equivalent of a concession and guarantees franchised cars a place in the 40-car field each week, as well as a significantly larger portion of the payments. NASCAR, last September, after more than two years of conflicting negotiations, presented the teams with its final offer on franchise extensions; 13 organizations signed the agreements, but 23XI and Front Row refused.The two teams initially obtained a preliminary injunction to be recognized as franchisees for this season until a jury verdict on the antitrust allegations. That was overturned, and 23XI and FRM are currently competing as “open” teams. NASCAR wants the money that was paid to the teams during the part of the season in which they had a franchise returned.
The teams have also appealed for the franchise status to be reinstated, but NASCAR argued in court last week that it has an interested buyer for one of the six franchises previously held by 23XI and FRM, and plans to immediately begin redistributing the franchises. 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 franchises, 23XI and FRM are no longer at risk of irreparable harm. The teams countered 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 franchise rights.” Tyler Reddick of 23XI has a clause in his contract that states the team would be in breach if his Toyota doesn’t have a franchise. 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 franchise 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 with franchises are becoming frustrated with the case, and Bell warned last week that the entire franchise system risks collapsing if an agreement is not reached, and 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 motorsports properties, said he was “very disappointed with the direction” the lawsuit has taken.Towriss said he would also like NASCAR to reach an agreement with 23XI and FRM.“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? Are they the people we meet with in private, or is it what they say when we’re not around?'”
Dan Towriss, owner of Spire Motorsports
