Key Legal Victory in NASCAR’s Legal Battle
A federal judge issued a significant victory for two racing teams, one of which is owned by Michael Jordan, in the antitrust legal dispute against NASCAR, filed by 23XI Racing and Front Row Motorsports. Judge Kenneth Bell ruled in favor of 23XI, owned by Jordan and Denny Hamlin, three-time winner of the Daytona 500, and Front Row, owned by Bob Jenkins, in an argument over the definition of the market for “premier stock-car racing.” 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, different from Formula 1, IndyCar, and other lower levels of stock-car racing, which are not equivalent substitutes for NASCAR. NASCAR, in a counterclaim, alleged that the teams illegally conspired in the negotiation of new franchise agreements. However, Bell found that NASCAR defined the relevant market as “the market for the entry of cars in NASCAR Cup Series races in the United States and any other location where a Cup Series race is held.” The lawsuit was filed a year ago by 23XI Racing and Front Row Racing, being 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 signing. This followed more than two years of tense negotiations over the franchises, which are fundamental to NASCAR’s business model, as they guarantee income and access to weekly races. 23XI and Front Row would probably go bankrupt without them and are running this season without a franchise, which entails a significant reduction in prizes. The trial is expected to begin on 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 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.”NASCAR is trying its best to reach an agreement in the federal antitrust lawsuit.
Steve Phelps, NASCAR Commissioner
NASCAR, in its own statement, highlighted its commitment to making NASCAR the premier motorsports series in the United States since its founding in 1948. NASCAR 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 last 77 years. Antitrust laws encourage this, and NASCAR has done nothing anticompetitive in building the sport from the ground up since 1948”.
NASCAR’s 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 itself is anticompetitive.”Many of the teams that did sign the new franchise agreements last year filed statements with the court in support of the franchise system and asking for an agreement. All teams want the franchises to be permanent, something that NASCAR did not concede during the negotiations of 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 agreed to make the franchises permanent, and the obstacle in the agreement 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 structure could be destroyed by a defeat and are upset because it would be due to the monetary demands made by 23XI and Front Row. Bell issued another victory for 23XI and Front Row when he dismissed NASCAR’s counterclaim against Curtis Polk, Jordan’s business manager and one of the owners of 23XI.
