Key Legal Victory in the Legal Battle Between NASCAR and Racing Teams
A federal judge issued a significant decision favoring two racing teams, one of which is owned by Michael Jordan, increasing pressure on NASCAR to resolve the antitrust lawsuit filed by 23XI Racing and Front Row Motorsports. NASCAR commissioner Steve Phelps had previously expressed the series’ intention to “do everything possible” to reach a settlement in the federal antitrust lawsuit, in what were the most extensive comments yet from the defendants. The United States District Judge, Kenneth Bell, ruled in favor of 23XI, owned by Jordan and Denny Hamlin, three-time Daytona 500 winner, and Front Row, owned by Bob Jenkins, in a discussion about 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 debatable.The teams argued that the relevant market for top-tier stock-car racing teams is that “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, and that other types of motorsports such as Formula 1 and IndyCar, as well as all lower levels of stock-car racing, are not a substitute equal to NASCAR. NASCAR, in a counterclaim, asserted that the teams illegally conspired to unite in negotiations over new franchise agreements, but Bell determined that NASCAR alleged “deliberately, clearly, and unequivocally” that the relevant market is “the market for the entry of automobiles in NASCAR Cup Series races in the United States and any other location where a Cup Series race is held”.NASCAR controls the market and NASCAR’s argument that teams can compete in other series is debatable.
Judge Kenneth Bell
The lawsuit was filed a year ago by 23XI Racing and Front Row Racing, when they were the only two organizations out of a total 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 prize money. 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 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 making NASCAR the leading motorsports series in the United States since its founding in 1948. Phelps did the same last week while reading a statement that lasted more than six minutes; he defended the France family, based in Florida, which founded and controls NASCAR and most of the tracks that the series uses for events. The lawsuit continues, and the outcome could have significant implications for the future of NASCAR’s franchise system.We are very pleased with the Court’s decision today, which ruled in our favor. Not only does it deny NASCAR’s motion for summary judgment, but it also grants our motion for partial summary judgment, determining that NASCAR has monopoly power in a properly defined market.
Jeffrey Kessler, attorney for 23XI and Front Row
