NASCAR Teams Fight for Charter Recognition
In a recent legal dispute, two NASCAR teams, one of which is owned by NBA legend Michael Jordan, have argued before a federal judge the need for a preliminary injunction to be recognized as charter organizations. The request seeks to maintain their status until the antitrust lawsuit against the racing series is resolved. The 11-page document filed with the U.S. District Court for the Western District of North Carolina responds to NASCAR’s notification to Judge Kenneth Bell, where it was reported that it would not redistribute any charter to new participants while the case heads to the court date on December 1. This NASCAR 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 businessman 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 portion of the 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 chartered teams for this season, pending a jury verdict on antitrust allegations. This was overturned, and currently 23XI and FRM compete as “open” teams. NASCAR wants the money paid to the teams during the portion of the season in which they had charters returned to them. The teams have also appealed to have their charter status restored, but NASCAR argued in court last week 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 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 charter rights.” Tyler Reddick from 23XI has a clause in his contract that states 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 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 charter teams are getting frustrated with the case, and Bell warned last week that the entire charter system risks imploding if an agreement is not reached. 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 motorsport 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 bosses a few weeks ago and it was ‘¿How can we help?’ What we saw [in court], what was published 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
