Key Legal Victory for 23XI Racing and Front Row Motorsports in Antitrust Lawsuit Against NASCAR
A federal judge issued a significant victory for two racing teams, one owned by Michael Jordan, in the antitrust litigation against NASCAR. This decision puts even more pressure on the organization to reach a settlement. United States District Judge Kenneth Bell ruled in favor of 23XI Racing, owned by Jordan and Denny Hamlin, a three-time Daytona 500 winner, and Front Row Motorsports, owned by Bob Jenkins. The dispute centers on the definition of the “premier stock car racing” market. Bell determined that NASCAR controls the market, invalidating the organization’s argument about the possibility of teams competing in other series. NASCAR is trying its best to reach a settlement in the federal antitrust lawsuit. The teams argued that the relevant market for top-tier stock car racing teams is the NASCAR Cup Series. This assertion 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. In a countersuit, NASCAR alleged that the teams illegally conspired in the negotiations of new franchise agreements. However, Bell determined 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 a total of 15 that did not sign extensions to the new franchise agreements. These new agreements were presented to the teams at the start of the 2024 playoffs, with a deadline for signing. They 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 could go bankrupt without them and are competing 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.Kessler added that the trial will now focus on whether NASCAR has maintained that power through anti-competitive acts and used it to harm the teams. They are preparing to present their case to the jury and obtain a verdict that benefits all teams, partners, drivers, and fans. NASCAR, in its statement, highlighted its commitment to making NASCAR the leading motorsport series in the United States since its founding in 1948. The organization stated that it hopes to demonstrate that it became the leading motorsport in the United States through hard work, risk-taking, and many significant investments over the past 77 years. NASCAR also expressed its belief in the franchise system and its intention to continue defending it from efforts by 23XI and Front Row to allege that the system is anti-competitive. Most of the organizations that did sign the new franchise agreements last year filed statements with the court in support of the system and asking for an agreement. All teams want the franchises to be permanent, something that NASCAR did not concede during the current agreement negotiations.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 motion 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 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, with the sticking point in the settlement talks being 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 dismantled by a defeat and feel aggrieved that this is due to the monetary demands of 23XI and Front Row. Bell issued another victory for 23XI and Front Row by dismissing NASCAR’s counterclaim against Curtis Polk, Jordan’s business manager and one of the owners of 23XI.
