NASCAR Responds to Michael Jordan and 23XI Racing’s Lawsuit
In its latest court filing, NASCAR argues that Michael Jordan, through his team 23XI Racing, seeks to obtain a permanent charter that no other team possesses. The stock car racing series also claims that neither 23XI Racing nor Front Row Motorsports have suffered damages from competing as “open” teams. NASCAR indicated in its 34-page response filed on Monday that there are interested buyers for the six charters that have been reserved, while a federal judge decides whether the two teams can recover them for the remaining 11 races of this season. The organization is prepared to immediately begin the process of assigning the charters to other teams. These arguments are part of the federal antitrust lawsuit filed by 23XI and Front Row against NASCAR, in a dispute over charters, which are essentially franchise tags. 23XI, owned by Michael Jordan and Denny Hamlin, and Front Row, owned by Bob Jenkins, were the only two organizations out of 15 that did not sign extensions to the new charter agreements. All teams fought for charters to be permanent during more than two years of extension negotiations, but NASCAR refused and its final offer was only until 2031. 23XI and Front Row obtained a temporary restraining order to be recognized as chartered teams while the case heads to a trial date on December 1. The court order was eventually overturned and appealed by the teams. U.S. District Judge Kenneth Bell will hear arguments on August 28 regarding the matter. 23XI and Front Row, as “open” teams, do not receive the same financial percentages as chartered teams. A rule change in July, after the two organizations had their charter status removed, ensured that the six cars would not be in danger of failing to qualify for a race; starting positions are guaranteed for the 36 charter cars in each 40-car field.23XI and Front Row have maintained that they will continue to compete even if they have to do so as open teams. NASCAR has argued that when the two organizations did not sign the extensions, they lost all rights to the charters and the sanctioning body should be free to move them.“Mr. Jordan has said that he wants to use litigation to be granted a permanent charter that no other team has,” NASCAR alleged.
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NASCAR also argued that a court cannot order a private company to partner with teams it is not interested in doing business with. Another argument from NASCAR is that 23XI and Front Row have not been harmed by not having a charter because their drivers have not left the team and the rule change protects them from losing races; Tyler Reddick, from 23XI, has clauses in his contract that allow him to leave if his car does not have a charter. Additionally, NASCAR said it pays teams a higher percentage than even Formula 1 and that its team payment structure demonstrates that it is not a monopoly because it increased first by 28% in the 2016 charter agreement and then by 62% in the 2025 agreement.“The plaintiffs’ theoretical inability to obtain charters after the trial also does not justify NASCAR selling or transferring charters, because the plaintiffs do not have charters now due to their own strategic choice,” NASCAR said in its filing. “The plaintiffs had multiple opportunities to acquire Charters for 2025, and they squandered them.”
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“The plaintiffs are unaware that the actual May 2024 draft proposed to the teams carried forward the biggest win for the teams – a massive salary increase – which was established in the December 2023 draft. It also gave Charter holders the opportunity to obtain any improved extension terms that NASCAR offered to third parties and increased the teams’ ability to receive funding from investors, among other benefits.”“NASCAR pays teams more than even Formula 1 as a percentage of the winnings,” NASCAR said. “The plaintiffs ignore the salary increases that the teams received. Instead, they focus on a text during the negotiations for the 2025 Charter that said that an internal version of the May 2024 draft contained ‘zero wins’ for the teams.
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