Key Legal Victory in the Battle Between NASCAR and 23XI Racing
A federal judge issued a crucial decision on Tuesday, granting a significant victory to two racing teams, one of which is owned by Michael Jordan. This ruling intensifies the pressure on NASCAR in the context of the antitrust lawsuit filed by 23XI Racing and Front Row Motorsports. NASCAR commissioner Steve Phelps had indicated last week that the series is “doing everything possible” to reach a settlement in the federal antitrust lawsuit. These comments represent the broadest statements to date by the defendants. U.S. 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 an argument over the definition of the “premier stock-car racing” market. Bell determined that NASCAR controls the market, invalidating NASCAR’s argument that teams can compete in other series.The teams argued that the relevant market for top-tier stock-car racing teams is “the NASCAR Cup Series of NASCAR 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 other types of motorsports such as Formula 1 and IndyCar, as well as all lower levels of stock-car racing, are not equal substitutes to NASCAR. In a counterclaim, NASCAR accused the teams of illegally conspiring by joining together to negotiate new franchise agreements. However, Bell found that NASCAR alleged “deliberately, clearly, and unequivocally” that the relevant market is “the market for the entry of cars in NASCAR Cup races in the United States and any other location where a Cup race is held.”NASCAR controls the market and the argument that teams can race in other series is debatable.
Judge Kenneth Bell
The lawsuit was filed a year ago by 23XI Racing and Front Row Racing, being 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 start 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 revenue 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 asked for 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 side is complaining.
Judge Kenneth Bell
In its own statement, NASCAR highlighted the commitment it has demonstrated in building NASCAR as the premier motorsports series in the United States since its founding in 1948. Phelps did the same last week, reading a statement of more than six minutes; he defended the France family, based in Florida, who founded and controls NASCAR and most of the tracks that the series uses for events.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 partial motion for summary judgment, determining that NASCAR has monopoly power in a properly defined market.
Jeffrey Kessler, attorney for 23XI and Front Row
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 calling for a settlement in the case. All teams want the franchises to be permanent, something NASCAR did not concede during negotiations for the current agreement.NASCAR 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. Antitrust laws encourage this, and NASCAR has done nothing anticompetitive by building the sport from the ground up since 1948.
NASCAR Statement
In the event that an agreement is not reached before the trial and NASCAR loses, the entire franchise system risks being dismantled or revised. Teams are frustrated by that threat, and it is understood that NASCAR has since agreed to make the franchises permanent and the sticking point in the 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 aggrieved that it is due to monetary demands made by 23XI and Front Row. Last week, Bell issued another victory 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.
