Legal Conflict in NASCAR: Michael Jordan’s Teams Seek to Regain Charter Status
In an unexpected turn, two NASCAR teams, one of which is owned by NBA legend Michael Jordan, have presented arguments to a federal judge to reinstate their charter status. This request comes amid an ongoing antitrust dispute with the racing series.
The 11-page document, filed in the United States District Court for the Western District of North Carolina, responds to NASCAR’s notification to Judge Kenneth Bell, stating that charters will not be redistributed to new participants while the case heads towards its December 1st trial date. NASCAR’s decision came after a tense hearing that revealed emails and text messages with offensive language, originating 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, led by businessman Bob Jenkins, are suing NASCAR over antitrust claims related to the charter system. A charter is similar to a franchise and guarantees participating cars a spot on the 40-car grid each week, as well as a significantly larger share of the payments.
After more than two years of negotiations, NASCAR presented its final offer on charter extensions last September. Although 13 organizations signed the agreements, 23XI and Front Row refused.
Initially, the two teams obtained a preliminary injunction to be recognized as charters during this season, until a jury verdict was issued on the antitrust allegations. However, this decision was overturned, and currently 23XI and FRM compete as “open” teams. NASCAR seeks to recover the money paid to the teams during the part of the season in which they were charters.
The teams have also appealed for their charter status to be reinstated, but NASCAR argued in court that it has a buyer interested in one of the six charters previously held by 23XI and FRM, and plans to redistribute them 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 at risk of irreparable harm. The teams argued that the threat persists “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 will 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 NASCAR’s agreement not to redistribute any charter 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 do have charters feel frustrated by the case. Judge Bell warned that the entire charter system could collapse if an agreement is not reached. The teams that are not part of the lawsuit believe that their valuations are affected 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 stated his desire for NASCAR to reach an agreement with 23XI and FRM.
