Key Legal Victory for 23XI Racing and Front Row Motorsports in NASCAR Lawsuit
A federal judge issued a significant victory for two racing teams, one of which is owned by Michael Jordan, increasing pressure on NASCAR to resolve the antitrust lawsuit filed against it 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 race 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.” This 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, as well as all lower levels of stock car racing, are not an equal substitute for NASCAR. 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 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 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. Other teams have requested an agreement to move forward, but mediation sessions and private negotiations have not worked. The trial is scheduled for December 1st.The same type of transaction, the sale and purchase of top-tier stock car racing services, cannot be a different relevant market depending solely on which party is complaining.
Judge Kenneth Bell
NASCAR, in its own statement, highlighted the commitment it has demonstrated in building NASCAR as the premier motorsports series in the United States since its formation in 1948. NASCAR expects to demonstrate that it became the leading motorsports sport in the United States through hard work, risk-taking, and many significant investments over the past 77 years. The antitrust law encourages this, and NASCAR has done nothing anticompetitive in building the sport from the ground up since 1948. 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. All the teams want the franchises to be permanent, something NASCAR refused to concede during negotiations for the current agreement.We are very pleased with the Court’s decision today, which ruled in our favor. Not only does it deny NASCAR’s request for summary judgment, but it also grants our request for partial summary judgment, determining that NASCAR has monopoly power in a properly defined market.
Jeffrey Kessler, attorney for 23XI and Front Row
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 since agreed to make the franchises permanent and the issue in 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 being made by 23XI and Front Row. Bell issued another victory 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.
