23XI Michael Jordan and other team sue NASCAR over revenue sharing model

CHARLOTTE, N.C. (AP) – Two NASCAR teams – one of them owned by Michael Jordan – filed a federal antitrust lawsuit Wednesday against the stock car series and president Jim France, alleging that the new charter system limits competition by unfairly tying teams to series, its songs and suppliers.

23XI Racing and Front Row Motorsports filed the lawsuit in the Western District of North Carolina in Charlotte after two years of contentious negotiations between the privately held National Association for Stock Car Auto Racing and 15 organizations with charters in the top Cup Series.

“The French Family and NASCAR are monopolistic tyrants,” the teams said in the lawsuit, a copy of which was obtained by The Associated Press. “And oppressors will continue to impose their will to harm others until their targets rise up and refuse to be victims. This moment has now come.”

NASCAR in early September unveiled its final offer for what is essentially a revenue-sharing model; Thirteen organizations signed up, with most saying they did so under duress or felt threatened.

However, 23XI Racing, the team co-owned by Jordan and veteran driver Denny Hamlin, and the smaller Front Row team refused to sign the contract. They hired Jeffrey Kessler, a leading antitrust lawyer who has represented players in all four major professional sports in North America, helped usher the NCAA into the era of paid college athletes, and won a landmark equal pay settlement for members of the U.S. national soccer team women .

The lawsuit demands detailed information from NASCAR and France “related to their exclusionary practices and intention to isolate themselves from any competition.” Kessler said he would seek a preliminary injunction that would allow both teams to compete in 2025 under a new charter agreement, pending the outcome of the court proceedings.

The teams said they would seek treble damages for the anti-competitive conditions that have governed the sport since the original 2016 charter agreement.

“Everyone knows I have always been a fierce competitor and that will to win drives me and the entire 23XI team every week on the track,” said Jordan, a retired NBA star. “I love racing and the passion of our fans, but the way NASCAR is run today is unfair to the teams, drivers, sponsors and fans. Today’s action shows that I am ready to fight for a competitive market where everyone wins.

NASCAR, based in Daytona Beach, Florida, had no immediate comment.

What is a charter?

The charter system introduced in 2016 included revenue sharing and other operating elements for the top motorsports series in the United States, while guaranteeing 36 entries in each lucrative Cup Series race. The lawsuit says that of the 19 team owners who were originally awarded charters in 2016, only eight remain in the sport.

One of the departing teams was Furniture Row Motorsports, which sold its charter for $6 million at the end of the 2018 season – one year removed from winning the Cup Series championship – evidence, plaintiffs say, that the charter left the teams with no path to profitability.

The original statutes ran from 2016 to 2020 and were automatically extended until December 31, 2024. With the looming expiration, teams argued that the revenue split was unfair and demanded a larger share of the pot.

Front Row owner Bob Jenkins maintains that he has never turned a profit since forming the band in 2005. He won the 2021 Daytona 500 with driver Michael McDowell and failed to break even in a banner season.

With four sons and wanting to leave something for the family to support, Jenkins said he wanted a fair deal.

“I have been a part of this racing community for 20 years and I couldn’t be more proud of the Front Row Motorsports team and our success. But it’s time for a change,” Jenkins said. “We need a more competitive and fair system where teams, drivers and sponsors can be rewarded for our collective investments by building long-term enterprise value, just like any other successful professional sports league.”

What do teams want?

During the negotiations, teams asked for more revenue, a say in management and rule-making and cuts in the contracts that NASCAR earns from participants’ names, images and likenesses.

The teams also wanted the statutes to be permanent; France refused.

According to the lawsuit, NASCAR made the take-it-or-leave-it offer on Friday, Sept. 6, 48 hours before the start of the playoffs. He says NASCAR threatened teams to sign a more than 100-page agreement or risk losing not only their charters but the charter system itself unless a “significant number of teams” agreed.

“The teams knew that fielding a NASCAR car had become so costly that it would become so expensive for most of them to compete without even the modest revenue sharing and stability provided by the charter system and the total loss of value of their charter if the charter system was discontinued,” the lawsuit says.

Rick Hendrick, owner of the biggest winnings in NASCAR history, said he only signed the contract because he was tired of negotiating. 23XI Racing and Front Row disagreed, but their motivation remained unclear until Wednesday’s court filing.

What does the lawsuit demand?

The lawsuit alleged that NASCAR violated the Sherman Antitrust Act by preventing any stock car racing team from competing on the track “without accepting the anticompetitive conditions it imposed.”

“Faced with a take-it-or-leave-it offer and no competitive opportunity to enter the top stock car races in the United States, most teams concluded they had to sign an agreement,” the lawsuit states. “One team described the signing as “forced” and another said it was “under duress.”

“The third team said: NASCAR ‘put a gun to our heads’ and ‘we had to sign a contract.’ A fourth described NASCAR’s tactics as a “communist regime.” None of these teams would allow their identities to be publicly revealed for fear of retaliation from NASCAR.

How did it get here?

NASCAR was founded in 1948 by the late Bill France Sr. and has since been run first by his son Bill Jr., then his grandson Brian France, and now France Sr.’s second son, Jim. Ben Kennedy, the son of Bill Jr.’s daughter, Lesa, is the heir to the family business.

The lawsuit claims that NASCAR operated under annual contracts until 2016 that did not ensure long-term viability for any team. There was no guaranteed entry to any Cup Series event or prize money, and teams were dependent on individual sponsors to find.

This model made sustainability almost impossible for any owner trying to operate solely as a racing team without additional outside companies. Chasing sponsorships became a full-time job, and teams often competed directly with NASCAR for financial deals.

The lawsuit says the teams felt they were operating in “continuous financial instability,” which caused some of the most successful organizations to go out of business. He cites Jimmie Johnson, a NASCAR Hall of Famer who is mostly retired as a driver and co-owns a fledgling Cup Series team.

“As NASCAR Hall of Famer Jimmie Johnson says,” the lawsuit says, “the best thing that can be is NASCAR, the second-best driver and the last thing that can be a team owner.”

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