Legal Conflict in NASCAR: Michael Jordan’s Teams Seek Charter Recognition
In a recent legal development shaking the world of motorsports, two NASCAR teams, one of them owned by NBA legend Michael Jordan, have presented arguments before a federal judge. The goal is to obtain a preliminary injunction that recognizes them as charter-entitled organizations until their antitrust lawsuit against the racing series is resolved. The 11-page filing, made in the United States District Court for the Western District of North Carolina, is a response to NASCAR’s notification to Judge Kenneth Bell. The racing series announced that it would not redistribute any charter to new entrants while the case moves toward its December 1 deadline. The 23XI Racing team, owned by Jordan and three-time Daytona 500 winner Denny Hamlin, along with Front Row Motorsports, owned by businessman Bob Jenkins, are suing NASCAR over antitrust claims related to the charter system. A charter is equivalent to a franchise and guarantees cars a spot 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 won a preliminary injunction to be recognized as charters for this season until a jury verdict was issued on the antitrust allegations. This was overturned, and 23XI and FRM currently 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 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 begin redistributing the charters immediately. 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 at risk of irreparable harm. The teams responded that the threat still exists “due to the risk of claims for breach of contract by 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 teams that do have a charter are feeling frustrated by the case, and Judge Bell warned that the entire charter system risks imploding if an agreement is not reached. The teams that are not suing believe that their valuations are being harmed by the litigation. Dan Towriss, the majority owner of NASCAR’s Spire Motorsports team, 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 also said he would like to see NASCAR reach an agreement with 23XI and FRM.We had meetings with NASCAR’s senior management a few weeks ago and it’s ‘¿How can we help?’ What we saw [in court], what was revealed in that case, is very inconsistent with what they say [NASCAR] 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 are not present?’
Dan Towriss
