by The future of NASCAR could be in trouble after a lawsuit was filed last week by none other than Michael Jordan’s NASCAR Team. 23XI Racing and Front Row Motorsports declined to sign the new charter agreement and are suing NASCAR and CEO Jim France for Sherman Antitrust Law violations. They hired lawyer Jeffrey L. Kessler, known for being involved with several well-known lawsuits. He helped establish unrestricted free agency in the NFL and helped the United States Women’s National Soccer team sue the U.S. Soccer Federation for Equal Pay. Kessler stated, “There has never been a case I have found that is as egregiously anticompetitive as this one,” via the Athletic. To understand just how detrimental this lawsuit could be, we’ll have to look back at how we got here.
What is the NASCAR Charter?
The NASCAR charter system was initially put into place during the 2016 season. It was later extended until the 2020 season. A new deal was being negotiated between NASCAR and the teams. On September 6th, the negotiations ended when NASCAR sent the teams a final take-it-or-leave-it version of the 2025 charter agreement. They gave teams until midnight to sign it or risk losing their charters. Thirteen of the fifteen teams agreed to sign the charter. 23XI Racing and Front Row Motorsports both did not sign it.
Here are the rules of the 2016 & 2020 Charter:
- Charter teams are guaranteed entry into every NASCAR Cup Series points race.
- There are 36 Charters available, determined by a long-term commitment to the sport.
- Teams must meet minimum performance standards, and failure to do so for three consecutive years can result in Charter removal.
- Charters can be sold on the open market or transferred to another team for one full season once in the first five years.
- Organizations are limited to a maximum of four cars.
- The Cup Series field consists of 40 cars, with 36 from Charter teams and four non-Charter teams.
Allegations against NASCAR
The 43-page filing highlights how NASCAR is a monopoly. The filing claims that NASCAR uses aggressive tactics to retain complete control. The lawsuit states that the France family “operates NASCAR like a closed-door shop, wheeling and dealing its monopoly in smoke-filled back rooms.” It highlights the “anticompetitive restrictions” that NASCAR has in its charter. This entails preventing teams from competing anywhere else and from buying cars or parts outside of NASCAR. The lawsuit states that NASCAR has tried to isolate the owners by refusing any efforts made to negotiate a better deal.
The lawsuit talks about NASCAR’s two-billion-dollar purchase of International Speedway Corp (ISC). The purchase includes their 12 racetracks and ARCA, which is the only other national-level stock car racing league in the United States. The final section of the lawsuit highlights that NASCAR now has more control as teams can no longer build their cars. The teams now rely on NASCAR to provide parts from their chosen vendors. Most of the 43-page filing explained why they believe NASCAR to be an unlawful monopoly.
The Sherman Antitrust Act
First, I’ll quickly explain the main points of the Act, and then I’ll explain how it relates to NASCAR. The Sherman Antitrust Act of 1890 is a federal statute prohibiting anticompetitive practices and promoting fair competition. It prohibits monopolies and conspiracies that restrain trade. A monopoly is the exclusive possession of the supply/trade of a good or service. The Act is a fundamental piece of antitrust legislation used to break up monopolies and regulate trade, ensuring a competitive consumer marketplace.
The lawsuit claims that NASCAR violated Section One. They allege that NASCAR conspired to restrain competition unreasonably. They have also accused NASCAR of being a monopoly, infringing on Section Two. The main argument of the lawsuit states that NASCAR prevented all stock car racing teams from competing “without accepting the anticompetitive terms” it imposes.
Conclusion
Jeffrey L. Kessler’s first move after filing the lawsuit was to file an injunction allowing 23XI and FRM to continue competing as chartered teams in 2025. This would allow them to proceed with the lawsuit “without being subject to any claimed release of antitrust claims.” They also plan to seek damages from NASCAR and demand a jury trial. NASCAR has yet to respond publicly. Micheal Jordan said, “I wouldn’t have filed it if I didn’t think I could win.”
In summary, the lawsuit filed by 23XI Racing and Front Row Motorsports against NASCAR raises significant concerns about competitive fairness within the sport. With prominent attorney Jeffrey L. Kessler leading the charge, the allegations of anticompetitive practices and monopolistic control suggest that NASCAR may be operating in ways that suppress competition and limit opportunities for teams. The potential fallout of this legal battle could be significant for the teams and the future of NASCAR itself.
As the case unfolds, it will be imperative for NASCAR to address these allegations transparently and consider the broader implications for the sport’s integrity. Should the court find merit in the claims, we could see substantial changes to the charter system and how NASCAR governs the relationships between itself and the teams. Whether through willing reforms or court-mandated changes, the landscape of NASCAR will change.
