NASCAR must let 23XI, Front Row teams race with charters amid battle over monopoly lawsuit, judge orders
Dec 18, 2024
CHARLOTTE, N.C. (WGHP) — NASCAR must allow the two NASCAR teams currently suing the company to race as charter teams in the 2025 season as the lawsuit continues, a federal court judge ordered with a preliminary injunction.
23XI Racing, which is co-owned by NBA legend Michael Jordan and NASCAR driver Denny Hamlin, and Front Row Motorsports, which is owned by businessman Bob Jenkins, filed a lawsuit against NASCAR on Oct. 2, accusing the company of anti-trust violations and monopolizing premier-level stock car racing. The intent of the lawsuit is also to get NASCAR to agree to share more revenue with the teams under its latest charter agreement.
However, a new NASCAR charter agreement threatened to prevent 23XIR and FRM from racing as chartered teams unless they dropped their lawsuit.
Bowman Gray parking information released ahead of Clash
NASCAR charters guarantee entry into all NASCAR Cup Series points races, and chartered teams get payouts for each race. 23XIR and FRM owned two each, which allowed each of the racing organizations to send two teams to all NASCAR Cup Series points races
In September, NASCAR's charter teams, which included both 23XIR and FRM, were asked to sign a new charter agreement, which included a provision that blocks teams that sign from suing NASCAR. 13 NASCAR Cup Series teams signed, but 23XIR and FRM refused because the agreement did not meet the demands of the negotiations they were seeking.
By refusing to sign the charter agreement, 23XIR and FRM faced racing in the 2025 season as open or unchartered team, which would mean a significant cut in revenue.
NASCAR also blocked the sale of two charters owned by Stewart-Haas Racing to 23XIR and FRM. Stewart-Haas, which shut down three of its teams after the 2024 season, sold the three charters from those teams with 23XIR and FRM purchasing one each.
The two suing racing organizations asked the court for a preliminary injunction to allow them to race in the 2025 season with their existing charters as well as with an additional charter each purchased from Stewart-Haas Racing.
A prior judge on the case did not grant the injunction, so the organizations came back to the courts with more information about the irreparable financial harm they would incur if their teams were not able to run as chartered teams in 2025, including a point shared in the ruling about drivers's contract terms:
“Specifically, on Nov. 18, 2024, 23XI driver Tyler Reddick, who recently finished in fourth place in the 2024 Cup Series, notified the team that it had breached his driver and personal services agreement, which requires 23XI to 'provide the Race Car prepared and entered by 23XI under a NASCAR Cup Series Charter Member Agreement … for Reddick to drive in all Cup Series Events,' and had 30 days to cure the breach.”
There were also examples cited to the court where sponsors could opt out of contracts if the teams couldn’t run as charter teams:
“Monster Energy informed 23XI that it decided to delay [its] ‘Ultimate Race Weekend’ Consumer Promotion to a later date' because 'the uncertainty around 23XI, Tyler, and the relationship with N[ASCAR] for the start of the season' makes it 'just too big of a risk.'
"23XI received another email from Monster Energy, stating that it was reconsidering its entire relationship with 23XI.
“To the same effect, Front Row’s largest sponsor, Love’s Travel Stops, emailed the team on Nov. 22, 2024, stating its concern about Front Row’s 'ability to meet contractual obligations next season' given 'the numerous uncertainties raised around … not having a team Charter, as the 2025 season approaches.'"
Wednesday's injunction means both teams will be able to run three cars each, two under the charters they already held and one each from the charters they are getting from Stewart-Haas, while also still pursuing their lawsuit against NASCAR.
In the injunction, the court also found that the teams have established a likelihood of success on their anti-trust claims and that language in the charter agreement forces NASCAR’s monopolistic power onto the teams.
“The Court finds that NASCAR possesses monopoly ... power in the relevant market, which is the market for premier stock car racing teams in the United States," the injunction reads. "NASCAR’s Cup Series is the only premier stock car racing series in the United States, and premier stock car racing is a distinct form of automobile racing with unique cars and highly specialized racing teams for which other types of motorsports like Formula 1 and IndyCar are not substitutes. Therefore, NASCAR fully controls which race teams can compete at the highest level of stock car racing. Effectively, it has a 100% market share.”
“In practical effect, the question before the court is: can a monopolist require that a party agree to release the monopolist from all claims that it is violating the antitrust laws as a condition of doing business?' The answer is, 'No.'”
NASCAR can appeal the ruling to the U.S. Court of Appeals, but there’s no word on whether it will.