Michael Jordan's Teams Race to Stop NASCAR's Business Model
Retired NBA legend Michael Jordan and his co-owners of two NASCAR teams are embroiled in an antitrust legal battle against NASCAR, challenging what they perceive as an unfair business model. The dispute centers on NASCAR's charter system, which the teams argue restricts competition by binding teams to the series, tracks, and suppliers.
A Quick Who’s Who
There are a number of parties on both sides of this legal battle. You may not be familiar with them, so we’ll give you a quick run-down. The plaintiffs are 23XI Racing LLC and Front Row Motorsports Inc., and the defendants are NASCAR and James France.
23XI Racing is a North Carolina company owned by entities controlled by NBA legend Michael Jordan, NASCAR legend Denny Hamlin, and their business partner Curtis Polk. 23XI was founded with the sole purpose of competing in the NASCAR Cup Series. The team acquired its first charter in October 2020 and began racing in the 2021 Cup Series. Over time, 23XI Racing expanded its operations by acquiring additional charters and investing significantly in its racing team.
Front Row Motorsports is mainly a Tennessee corporation, though registered to transact business in North Carolina. Founded in 2004, Front Row runs cars in both the NASCAR Cup Series and the NASCAR Craftsman Truck Series. The team began as a part-time operation and has since grown to run two full-time cars in the Cup Series. Despite its emergence as a competitive team, Front Row Motorsports has struggled to generate a profit.
You’re undoubtedly familiar with NASCAR (though did you know it stood for the National Association for Stock Car Auto Racing?). The privately owned Florida-based company was founded by William H.G. "Big Bill" France Sr. in 1948. It’s controlled by the France family, including Big Bill’s son, Jim France, who has been the CEO since 2018. NASCAR operates as the sanctioning body for three national stock car racing series in the United States, with the NASCAR Cup Series being the top-tier level of competition.
The Auto Racing Market
It may not surprise you, with NASCAR being the household name that it is, that the company has been accused of controlling the market for top-level stock car racing teams.
This market is very specialized because these teams are only set up to race in stock car events (unlike other types of racing like Formula 1 or Indy Car). Running a team costs about $18 million each year, and the skills needed don't apply to other racing types. The market is focused on the United States because there are no other major stock car racing series elsewhere, so these teams have no other competitive options outside the U.S.
NASCAR is the only buyer of services from these top racing teams in the U.S.— similar to how the NFL and NBA control their player markets. NASCAR's control is strengthened by blocking other competitors from accessing the best tracks and teams needed to start a rival racing series. This gives NASCAR complete control over the market, allowing it to set terms for the teams that are much less favorable than if there were competition. This keeps NASCAR in a dominant position and limits competition in the market.
NASCAR Accused of Controlling the Market
This past October, 23XI Racing and Front Row Motorsports filed a complaint in federal court in North Carolina, naming NASCAR and its CEO as defendants. The filing outlined several key points regarding the alleged monopolistic practices of the France family and NASCAR.
The complaint described how the France family has maintained control over NASCAR since its founding, using their influence to monopolize the premier stock car racing market in the country. The France family, through NASCAR, has allegedly engaged in anticompetitive practices to eliminate competition and maximize their profits at the expense of racing teams. This control is characterized as a "monopoly enterprise," with the family using NASCAR to enforce rules and agreements that stifle competition and maintain their dominant position in the market.
The Charter System
In 2016, NASCAR introduced Charter Agreements, which were intended to provide racing teams with guaranteed entry into Cup Series events. They essentially function like a franchise model and include revenue sharing. The charter system is a significant aspect of how teams participate in the series, as it involves binding agreements that dictate their involvement with the series, tracks, and suppliers.
However, these agreements are alleged to have been a product of NASCAR's monopoly power, imposing less favorable terms than what might have been negotiated in a competitive market. The agreements included restrictions that prevented teams from participating in other racing series, further entrenching NASCAR's control over the premier stock car racing market.
The Charter Agreements also included covenants prohibiting teams from competing in other stock car racing events. These non-compete clauses are seen as a way to restrict the availability of top-tier racing teams to potential competitors, thereby maintaining NASCAR's market dominance.
Monopsony Allegations
The complaint further alleges that NASCAR, under Jim France, has engaged in a series of actions to maintain its monopsony power over racing teams. A monopsony is like the reverse of a monopoly: a market where there’s only one buyer for a particular good or service, but many sellers.
The complaint detailed how NASCAR used its monopsony power to impose the 2025 Charter Agreements on racing teams. These agreements are alleged to contain even more restrictive and unfavorable terms than previous charters, with NASCAR leveraging its position to force teams into accepting conditions that would not exist in a competitive market. The agreements include a release clause that could potentially shield NASCAR from antitrust claims, further entrenching its monopsony power.
On top of that, the plaintiffs accused NASCAR of acquiring racetracks and imposing exclusivity provisions to prevent other racing series from accessing these venues. By owning key racetracks and requiring exclusive agreements with those it does not own, they claim that NASCAR effectively blocks competitors from entering the market. For example, NASCAR's acquisition of the ARCA Menards Series is portrayed as a strategic move to eliminate potential competition. By relegating ARCA to a feeder series, NASCAR prevents it from becoming a viable competitor to the Cup Series.
The plaintiffs also highlighted the introduction of the Next Gen car, which they described as an anticompetitive measure that increases costs for teams and ties them more closely to NASCAR. Teams must purchase standardized parts from NASCAR-approved suppliers, and the cars remain NASCAR's property, preventing their use in other racing events.
NASCAR’s Exploding Offer
In September, NASCAR presented all Cup Series teams with a last-minute offer that was essentially a take-it-or-leave-it proposition. This offer was part of ongoing negotiations regarding NASCAR's charter system. But 23XI and Front Row found this offer to be unfair.
They believed that the terms of the charter system limited competition by unfairly restricting teams' operations within the NASCAR framework. As a result, both 23XI Racing and Front Row Motorsports decided not to sign the agreement. They perceived NASCAR's approach as monopolistic, arguing that the France family and NASCAR used their dominant position to impose unfavorable terms on the teams. This refusal to sign the offer is central to their antitrust lawsuit against NASCAR.
Teams Race to Get an Injunction
Last month, as the start of NASCAR championships in Phoenix was underway, the plaintiff teams filed a request for a temporary injunction to compete as chartered teams without a charter agreement (i.e., to compete without a clause that prevents them from suing NASCAR). This would also preserve their antitrust claims, which charter teams typically relinquish.
Prominent antitrust lawyer Jeffrey Kessler, who represents the teams, argues that NASCAR has retracted the charter agreements previously offered. The teams wish to operate under the terms initially proposed while the lawsuit proceeds. NASCAR's lawyer, Christopher Yates, argued that the teams had other investment options and disputed claims of coercion in signing the charter agreements. However, Kessler countered that the new charter terms could threaten the teams' survival and lead to the departure of key figures like Reddick.
The issue is crucial for determining the future operations of 23XI and Front Row. Last month, the parties argued their points at a hearing in front of U.S. District Judge Frank D. Whitney. The plaintiff teams argued that allowing them to compete as chartered teams would not harm NASCAR, as the series initially planned for 36 chartered teams.
After their initial motion was denied for lacking specific harm evidence, they renewed it, citing a time-sensitive agreement to buy a charter from Stewart-Haas Racing. They requested an expedited court schedule due to the urgency and holiday timing, proposing a rapid response timeline. NASCAR opposed this, arguing the plaintiffs delayed their filing and that their urgency claims were insufficient.
What to Expect
Judge Whitney rejected the expedited schedule but adjusted some deadlines, setting Dec. 9 for NASCAR's response and Dec. 12 for the plaintiffs' reply, without a set hearing date. Whitney's decision reflects the court's need to manage multiple cases, including criminal hearings, without prioritizing high-profile sports litigations.
NASCAR, now planning to run 32 chartered teams and eight open cars, maintains that the teams can still compete as open teams and any potential damages could be compensated financially. Michael Jordan expressed confidence that the legal issues would not distract his team from their championship goals. But as the year closes, we still may not have an answer to the future of car racing in the country.
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