23XI Racing, Front Row Motorsports sue NASCAR alleging monopolistic practices

Two NASCAR teams, including one owned by basketball icon Michael Jordan, accused NASCAR of being a monopoly in a joint antitrust lawsuit filed Wednesday morning in federal court.

23XI Racing, the team co-owned by Jordan and three-time Daytona 500 winner Denny Hamlin, joined with Front Row Motorsports to allege NASCAR and its CEO Jim France have used “anticompetitive and exclusionary practices” to “enrich themselves at the expense of the premier stock car racing teams.”

“I love the sport of racing and the passion of our fans, but the way NASCAR is run today is unfair to teams, drivers, sponsors and fans,” Jordan said in a statement. “Today’s action shows I’m willing to fight for a competitive market where everyone wins.”

The disagreement stems from a long dispute related to NASCAR’s so-called “charter system,” which is similar to franchises for race teams. Holding a charter guarantees a starting spot in all 36 NASCAR Cup Series points races, and charter teams earn a share of the $1.1 billion per year in television money NASCAR will collect from a new TV deal starting next year.

Teams have been trying to negotiate an extension of the original 2016 charter agreement for more than two years before it expires Dec. 31, but NASCAR refused to give teams many of the concessions they sought — including making the charters permanent.

Last month, after meeting with teams individually, NASCAR told owners their offer was final — and the lawsuit alleges if enough teams did not sign it by a midnight deadline, NASCAR threatened to “eliminate the charter system altogether for 2025 and beyond.”

“They made a very serious threat to us, so we had to react seriously,” Hamlin said in an interview.

That reaction included 23XI (pronounced “23-11,” for Jordan’s longtime jersey number and Hamlin’s car number) and Front Row declining to sign the proposed agreement and being the only two holdouts among the current 15 charter organizations.

Front Row owner Bob Jenkins and 23XI stand to lose their four combined charters entirely if the legal situation does not play out in their favor, and the charters have sold for as much as $40 million.

“I don’t know what it’s going to cost me if I lose two charters in my race team, but it’s a lot of money,” Jenkins said in an interview. “But it’s the right thing to do. It’s the right thing for the sport.”

NASCAR did not offer an immediate comment as it is reviewing the filing.

GO DEEPER

Why are 23XI and Front Row suing NASCAR? Here’s what you need to know

The teams claim that while even the winningest organizations struggle to break even, NASCAR has unlawfully blocked the formation or growth of any other series — thus forcing competitors “to accept take-it-or-leave-it economic conditions” in order to participate.

Some of those practices alleged to be illegally monopolistic include purchasing a majority of the country’s top racetracks and giving NASCAR exclusivity to those venues; forcing other NASCAR-sanctioned racetracks to abide by exclusivity agreements; purchasing NASCAR’s “only other recognizable stock car racing series competitor” (ARCA) in 2018; prohibiting Cup teams from participating in any other stock car races; and choosing the exclusive third-party vendors to sell cars and parts to race teams while retaining ownership of all cars and parts.

23XI and Front Row have retained attorney Jeffrey Kessler, whose legal victories include the creation of NFL free agency, the implementation of name, image and likeness deals in college athletics and winning equal pay for the U.S. women’s national soccer team.

Kessler told The Athletic every major sport goes through a transformation — “usually by the application of the antitrust laws, sometimes some other major transformative event.”

And this lawsuit, he said, “is NASCAR’s moment.”

“Someone had to stand up and say, ‘I’m not going to take it anymore,’” he said. “That’s what these two teams have done.”

Curtis Polk, another 23XI co-owner who is Jordan’s longtime business partner, said in an interview the plaintiffs are eager to discover where all the money is actually going within NASCAR (which would be obligated to open its books as part of the legal process unless it settles).

“We just want fairness,” Polk said. “It’s not about a particular issue or five particular issues. When you look at the financial inequality that exists here, how is anybody going to say that’s fair?”

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(Photo: Jared C. Tilton / Getty Images)