Garrett Emmons
Michael Jordan is suing NASCAR. On October 2, two NASCAR teams filed an antitrust lawsuit in the Western District of North Carolina against NASCAR, accusing the racing company of maintaining an illegal monopoly. The two teams are Front Row Motorsports and 23XI, a team co-owned by Michael Jordan and Denny Hamlin, a veteran NASCAR driver. In addition to NASCAR, they named Jim France, the CEO and Chairman of NASCAR and son of NASCAR-founder Bill France, Sr. as a defendant.
The dispute between the parties centers around NASCAR’s charter system. Under this system, which was implemented in a 2016 agreement, holding a charter guarantees a race team a starting position in NASCAR’s Cup Series races and a share of the television revenues.[1] NASCAR is different from other professional sports in which multiple franchises form a league to compete in. Rather, NASCAR is owned by one family: the France family. The current charter agreement was set to expire at the end of this year, and teams and NASCAR had been negotiating towards a new agreement. Eventually, NASCAR offered a final take-it-or-leave-it deal on September 16th, which thirteen of the fifteen teams accepted. 23XI Racing and Front Row Motorsports refused.[2] Now, they’re suing NASCAR.
Their complaint alleges that NASCAR “has exploited its economic power as the sole premier stock car racing organization in the United States.”[3] It further argues that NASCAR has reached and maintained this position through “anticompetitive and exclusionary practices.[4] These allegedly anticompetitive practices include buying up racing circuits and racetracks, requiring NASCAR teams to use specific cars, and restricting teams from “participating in races outside of NASCAR’s circuit.”[5] Of particular interest to the antitrust inquiry is the fact that NASCAR acquired its main stock car racing competitor, ARCA, in 2018.[6]
23XI and Front Row Motorsports are seeking several outcomes from the lawsuit. Most urgent is a preliminary injunction that would allow the two teams to continue to compete until the end of litigation.[7] Their potentially seismic goal is a permanent injunction that would “end NASCAR’s exclusionary practices and restore competition in the relevant market,” but the exact remedy is unclear.[8]
In order to succeed in a Sherman Act §2 lawsuit, the plaintiff must show both a) monopoly power and b) anticompetitive conduct. The first requirement seems easily satisfied when it comes to NASCAR, and much of the back and forth in litigation will be based around the second requirement. Jordan, for his part, is confident: “I wouldn’t have filed it if I didn’t think I could win.”[9] NASCAR and the France family have good reasons to not want to go to court even if the outcome will be in their favor. Discovery would require NASCAR to open up their financial records—something it has never had to do as a privately-owned company—revealing how much profit it (and by extension, the France family) takes in. If Michael Jordan and the racing teams are successful, the remedy is difficult to predict. It could be as simple as requiring NASCAR to sell off some of their racetracks in order to open the door for more competition.
Settlement is similarly tricky in this case. According to the plaintiffs’ lawyer Jeffrey Kessler, “No one is bringing this type of fight, this type of lawsuit, to move from a D-plus deal to a D deal. That is not going to happen.”[10] The two teams likely would want what they had been fighting for during the two years of charter agreement negotiations: more revenue, more say in governance and rule-making, a share of the revenue from NASCAR’s name, image, and likeness deals, and for the charters to be permanent.[11] It seems unlikely that the France family would easily give in to the demands it had so strongly refused during negotiations, even faced with a federal lawsuit.
If the case is settled, the result will likely be the relationship between NASCAR and its chartered teams becoming slightly more equitable. If it continues all the way to trial, NASCAR’s private finances will be revealed and the stock-car racing landscape in the United States may be permanently altered.
[1] How the NASCAR Charter System Works, NASCAR (Sept. 22, 2020), https://www.nascar.com/news-media/2020/09/22/how-the-nascar-charter-system-works/ [https://web.archive.org/web/20240930061035/https://www.nascar.com/news-media/2020/09/22/how-the-nascar-charter-system-works/].
[2] Jenna Fryer, NASCAR has Finalized a New Charter Agreement. Team Co-owner Michael Jordan Won’t Sign It, AP News (Sept. 9, 2024), https://apnews.com/article/nascar-charters-michael-jordan-423f18857461af57fc7da7bd7f2dd130 [https://web.archive.org/web/20240930201718/https://www.nascar.com/news-media/2018/04/27/nascar-acquires-arca-commitment-next-generation-racers/].
[3] Complaint at 1, 2311 Racing LLC v. National Association for Stock Car Auto Racing, No. 3:24-cv-886 (W.D.N.C. Oct. 2, 2024).
[4] Id.
[5] Id.
[6] Holly Cain, NASCAR Acquires ARCA,Affirming Commitment to Next Generation of Racers, NASCAR (April 27, 2018), https://www.nascar.com/news-media/2018/04/27/nascar-acquires-arca-commitment-next-generation-racers/ [https://web.archive.org/web/20240930201718/https://www.nascar.com/news-media/2018/04/27/nascar-acquires-arca-commitment-next-generation-racers/].
[7] Complaint, supra note 3, at 10.
[8] Id.
[9] Jordan Bianchi and Jeff Gluck, Michael Jordan Confident in Outcome of Lawsuit Against NASCAR, The Athletic (Oct. 6, 2024). https://www.nytimes.com/athletic/5822733/2024/10/06/michael-jordan-nascar-lawsuit/ [https://web.archive.org/web/20241009040729/https://www.nytimes.com/athletic/5822733/2024/10/06/michael-jordan-nascar-lawsuit/].
[10] Jordan Bianchi and Jeff Gluck, Why are 23XI and Front Row Suing NASCAR?, The Athletic (Oct. 2, 2024), https://www.nytimes.com/athletic/5812000/2024/10/02/23xi-front-row-nascar-lawsuit-explained/ [https://perma.cc/T7QT-ZA8M] [https://web.archive.org/web/20241009040835/https://www.nytimes.com/athletic/5812000/2024/10/02/23xi-front-row-nascar-lawsuit-explained/].
[11] Jenna Fryer, Michael Jordan’s 23XI and a 2nd Team Sue NASCAR Over Revenue Sharing Model, AP News (Oct. 2, 2024), https://apnews.com/article/nascar-antitrust-lawsuit-jordan-bded312b0330122249824cbc059dabf5 [https://web.archive.org/web/20241013040845/https://apnews.com/article/nascar-antitrust-lawsuit-jordan-bded312b0330122249824cbc059dabf5].