Key Legal Victory for 23XI Racing and Front Row Motorsports in Legal Battle Against NASCAR
A federal judge issued a significant decision in favor of two racing teams, one of which is owned by Michael Jordan, putting pressure on NASCAR to resolve the antitrust lawsuit filed by 23XI Racing and Front Row Motorsports. The United States District Court Judge Kenneth Bell ruled in favor of 23XI, owned by Jordan and Denny Hamlin, three-time Daytona 500 winner, and Front Row, owned by Bob Jenkins, in a dispute over the definition of the “premier stock car racing” market. Bell determined that NASCAR controls the market, invalidating NASCAR’s argument that teams can compete in other series.The teams argued that the relevant market for top-tier stock car racing teams is where “the NASCAR Cup Series is currently the only buyer.” This statement was supported by the expert opinion of Dr. Daniel Rascher, who concluded that “top-tier stock car racing” is a distinct form of auto racing, and that other types of motorsports such as Formula 1 and IndyCar, as well as all lower levels of stock car racing, are not an equivalent substitute for NASCAR. The lawsuit was filed a year ago by 23XI Racing and Front Row Racing, being the only two organizations out of a total of 15 that did not sign extensions to the new franchise agreements. The new franchise agreements were presented to the teams at the beginning of the 2024 playoffs with a deadline for signing. This followed more than two years of tense negotiations over the franchises, which are the core of NASCAR’s business model, as they guarantee revenue and access to weekly races. 23XI and Front Row would likely go bankrupt without them and are running this season without a franchise, which entails a significant reduction in prize money. The trial is scheduled for December 1st. Jeffrey Kessler, the lawyer representing 23XI and Front Row, stated: “We are very pleased with the Court’s decision today, which ruled in our favor. This means that the trial can now focus on whether NASCAR has maintained that power through anticompetitive acts and has used that power to harm the teams. We are prepared to present our case to the jury and are focused on obtaining a verdict that benefits all teams, partners, drivers, and fans.” NASCAR issued a statement in which it highlighted its commitment to the development of NASCAR as the premier motorsports series in the United States since its formation in 1948. NASCAR also stated: “NASCAR expects to demonstrate that it became the leading motorsport in the United States through hard work, risk-taking, and many significant investments over the past 77 years. Antitrust laws encourage this, and NASCAR has done nothing anticompetitive by building the sport from scratch since 1948.” The statement continued: “While we respect the Court’s decision, we believe it is legally flawed and will address it at trial and, if necessary, in the Fourth Circuit. NASCAR believes in the franchise system and will continue to defend it from the efforts of 23XI and Front Row to assert that the franchise system is anticompetitive.” Most of the organizations that did sign the new franchise agreements last year filed statements with the court in support of the franchise system and requesting a settlement in the case.NASCAR controls the market.
Judge Kenneth Bell
If an agreement isn’t reached before the trial and NASCAR loses, the entire franchise system risks being dismantled or revised. Teams are frustrated by that threat, and it’s understood that NASCAR has agreed to make the franchises permanent, with the sticking point in settlement talks being the amount of money that 23XI and Front Row are demanding in damages and legal fees.
Teams are concerned that the entire NASCAR framework could be destroyed by a loss and are upset because it would be due to the monetary demands being made by 23XI and Front Row. Last week, Bell issued another victory for 23XI and Front Row when he dismissed NASCAR’s counterclaim against Curtis Polk, Jordan’s longtime business manager and one of the owners of 23XI.
