NASCAR Teams, including Michael Jordan’s, Seek to Maintain Franchise Status
In a recent legal development that is shaking the world of motorsports, two NASCAR teams, one of them owned by the legendary basketball player Michael Jordan, argued before a federal judge the need to maintain their franchise status. The legal dispute centers on an antitrust lawsuit against the racing series.
The legal filing, which consists of 11 pages, was made in response to NASCAR’s notification to Judge Kenneth Bell. The racing organization had communicated that it would not redistribute any franchise to new participants while the case heads to its trial date on December 1st. This decision came after a tense hearing that included the disclosure of emails and text messages with explicit language, coming from Jordan and other high-profile plaintiffs.
The teams involved in the lawsuit are 23XI Racing, owned by Jordan and three-time Daytona 500 winner Denny Hamlin, and Front Row Motorsports, owned by Bob Jenkins. The lawsuit is based on antitrust claims related to NASCAR’s franchise system. A franchise guarantees teams a spot on the 40-car grid each week, as well as a significantly larger share of payments.
After two years of negotiations, NASCAR presented its final offer on franchise extensions last September. Thirteen organizations signed the agreements, but 23XI and Front Row refused.
Initially, the two teams obtained a preliminary injunction to be recognized as franchises during this season, until a verdict was issued on the antitrust allegations. However, that order was revoked, and currently 23XI and FRM compete as “open” teams. NASCAR seeks to recover the money that was paid to the teams during the part of the season in which they were franchises.
The teams have also appealed for their franchise status to be reinstated. NASCAR argued in court that it has a buyer interested in one of the six franchises previously held by 23XI and FRM, and that it plans to redistribute the franchises immediately. Following last week’s hearing, Judge Bell is expected to issue a ruling on the preliminary injunction.
NASCAR maintains that by refraining from redistributing the franchises, 23XI and FRM are no longer at risk of irreparable harm. The teams argued that the threat persists “due to the risk of claims for breach of contract by their irreplaceable drivers and the loss of sponsors in the absence of franchise rights.”
Tyler Reddick, of 23XI, has a clause in his contract stating that the team would be in breach if his Toyota is not a franchise. Jeffrey Kessler, the lawyer for both teams, indicated in court that Reddick has notified 23XI that it is in breach.
Kessler also argued that NASCAR’s agreement not to redistribute any franchise now “does not moot the plaintiffs’ motion for a preliminary injunction nor eliminate the plaintiffs’ irreparable harm if relief is not provided.”
The 13 teams that do have franchises are showing frustration with the case. Judge Bell warned last week that the entire franchise system risks collapsing if an agreement is not reached. The teams that are not suing believe that their valuations are being affected by the litigation.
Dan Towriss, the majority owner of the NASCAR team Spire Motorsports, expressed his disappointment with the direction the lawsuit has taken.
