Key Legal Victory in NASCAR’s Legal Battle
A federal judge issued a significant victory for two racing teams, one owned by Michael Jordan, increasing pressure on NASCAR to settle the antitrust lawsuit filed by 23XI Racing and Front Row Motorsports. United States District Judge Kenneth Bell ruled in favor of 23XI, owned by Jordan and three-time Daytona 500 winner Denny Hamlin, 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 and that NASCAR’s argument that teams can compete in other series is moot. The teams argued that the relevant market for top-tier stock car racing teams is that “NASCAR’s Cup Series is currently the only buyer.” The argument 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 other types of motorsports such as Formula 1 and IndyCar, and all lower levels of stock car racing, are not a substitute equal to NASCAR. “NASCAR made a strategic decision by asserting its counterclaim and must now live with the consequences.” The lawsuit was filed a year ago by 23XI Racing and Front Row Racing when they were the only two organizations out of 15 that did not sign extensions to the new franchise agreements. The new franchise agreements were presented to the teams at the start of the 2024 playoffs with a deadline for them to sign. 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 competing this season without a franchise, which entails a significant reduction in prizes. Other teams have asked for an agreement to move forward, but mediation sessions and private negotiations have not worked. The trial is scheduled for December 1st.NASCAR in its own statement promoted the commitment it has demonstrated in building NASCAR into the premier motorsports series in the United States since its formation in 1948. The organization hopes 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. 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 asking for a settlement in the case.“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 used it 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.”
Jeffrey Kessler, attorney for 23XI and Front Row
All teams want the franchises to be permanent, something NASCAR did not concede during the negotiations for the current agreement.
In the event that an agreement is not reached before the trial and NASCAR loses, the entire franchise system risks being dismantled or revised. The teams are frustrated by that threat and it is understood that NASCAR has since agreed to make the franchises permanent and the sticking point in the settlement talks is 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 made by 23XI and Front Row. Bell issued another win last week 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.
