NASCAR Teams, Including Michael Jordan’s, Fight for Charter Recognition
Two NASCAR teams, one owned by NBA legend Michael Jordan, presented arguments before a federal judge on Tuesday. The goal is to obtain a preliminary injunction recognizing them as chartered organizations, as their antitrust lawsuit against the racing series proceeds. The 11-page filing in the U.S. District Court for the Western District of North Carolina was in response to NASCAR’s notification to Judge Kenneth Bell. The racing organization indicated that it will not redistribute any letters to new participants while the case heads toward its trial date of December 1. NASCAR’s change of stance on Friday came a day after a contentious hearing that included the disclosure of emails and text messages with offensive language, coming from Jordan and other high-profile plaintiffs. 23XI Racing, the team owned by 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 the equivalent of a franchise and guarantees charter cars a spot on the 40-car grid each week, as well as a significantly larger share of payments. NASCAR, after more than two years of contentious negotiations, presented teams with its final offer on charter extensions last September. 13 organizations signed the agreements, but 23XI and Front Row refused. Initially, the two teams obtained a preliminary injunction to be recognized as charter holders for this season, until a jury verdict was issued on the antitrust allegations. That order was overturned, and currently 23XI and FRM compete as “open” teams. NASCAR wants to recover the money that was paid to the teams during the part of the season in which they had a charter. The teams have also appealed for the charter status to be 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 suffering irreparable harm. The teams argued 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 stating that the team will 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 they are in breach. Kessler also argued that NASCAR’s agreement not to redistribute any charter now “does not moot Plaintiffs’ Motion for a Preliminary Injunction nor eliminate Plaintiffs’ irreparable harm if relief is not provided.” The 13 teams with a letter are getting frustrated with the case: Bell warned last week that the entire letter system risks collapsing if an agreement is not reached, and 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 said he would also like to see NASCAR reach an agreement with 23XI and FRM.We had meetings with NASCAR’s senior management a few weeks ago and it’s “How can we help?”. What we saw [in court], what was revealed 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
