23XI vs NASCAR: Michael Jordan and the Lawsuit Shaking NASCAR

The world of motorsports is preparing for a high-octane legal showdown. Michael Jordan, co-owner of 23XI Racing, is at the center of an antitrust lawsuit against NASCAR, which will reach the courts on Monday. This case could reshape the business model of stock car racing, with significant consequences for the future of the competition.

A Duel in the Legal Arena

While most were enjoying the festivities, NASCAR teams, 23XI Racing and Front Row Motorsports, along with their respective legal teams, were finalizing their strategies for the trial. The lawsuit, filed in October 2024, accuses NASCAR of using monopolistic practices to restrict the income and independence of the teams. 23XI Racing, with five years of history, competes with Toyota vehicles driven by Bubba Wallace, Tyler Reddick, and Riley Herbst. The team is co-owned by Denny Hamlin and Michael Jordan.

I did it for the smaller teams too. It’s not just me. I believe everyone should have the opportunity to succeed in any business. My voice says that hasn’t been happening.

Michael Jordan

Front Row Motorsports, led by Bob Jenkins, has participated in the Cup Series since 2005 and currently competes with Ford vehicles, driven by Noah Gragson, Todd Gilliland, and Zane Smith.

The Essence of the Dispute

The essence of the lawsuit lies in 23XI and Front Row’s belief that NASCAR’s current practices prevent teams from reaching their maximum potential. They argue that the current system, including the Next Gen car and NASCAR’s control over circuits and contractual agreements, limits growth and expansion. The heart of the battle centers on NASCAR’s franchise system, where the plaintiffs consider the organization unfair in the distribution of revenue and in limiting the potential for value. The franchise system, introduced in 2016, grants licenses to teams, guaranteeing a place on the grid and a share of the prizes. NASCAR defends the system, arguing that it has increased the value of the licenses and that it was created at the request of the teams themselves. The dispute intensified when negotiations to extend the 2016 licensing agreement failed to secure permanent agreements for the teams.

At the center of the controversy is the distribution of income and the lack of permanent licensing agreements. Pre-trial documents revealed key financial information, showing the income and losses of the teams. 23XI, for example, experienced an increase in revenue, but also a loss in 2024. Front Row has operated at a loss for several years.

The Lawyers in the Arena

The case will pit two prominent legal figures against each other: Jeffrey Kessler, representing 23XI and Front Row, and Chris Yates, defending NASCAR. Both lawyers have extensive experience in antitrust litigation in the sports arena.

What to Expect?

The initial trial is scheduled to last 21 days, but appeals are anticipated, suggesting a prolonged legal battle. The case is expected to be highly controversial, given the close-knit nature of the NASCAR community. Among the revealed documents are transcripts of text messages that have generated controversy. The outcome of the trial could have significant consequences. If 23XI and Front Row win and seek monetary damages, they might not receive licenses. If NASCAR prevails, 23XI Racing could disappear.

The licensing system is a fundamental part of the sport, something we created with and for the teams. We will continue to defend and preserve it, but make no mistake, the lawsuit puts it at risk.

Steve Phelps, President of NASCAR

The outcome of the trial will redefine the future of stock car racing, whether NASCAR loses a key team or is forced to modify its nearly 80-year-old business structure.