Michael Jordan’s NASCAR team 23XI racing has failed an antitrust lawsuit against NASCAR and its CEO Jim France on October 4, alleging that the sports racing organization has engaged in anticompetitive practices.
Jordan founded 23XI racing in 2020 alongside Denny Hamlin and a business partner named Curtis Polk. The team has quickly become a prominent player in the sport.
Another team called Front Row Motorsports has partnered with Jordan to give extra weight to the legal complaint. This other team is owned by Bob Jenkins who has participated in the motorsport since 2005. Front Row claims that it has never turned a profit.
NASCAR’s ownership structure, which gives full control of the entire sport to the France family, allegedly exerts monopolistic powers that allow it to impose high costs on teams.
NASCAR Forces Teams to Abide to Unfair Clauses That Hurt Their Bottom Line
Michael Jordan and Front Row claim that NASCAR stifles competition and controls the sport in a way that is completely unfair to those who stick their necks out for it – namely team owners, drivers, partners, fans, and sponsors.
The teams typically struggle to generate profits despite making multi-million dollar investments on their cars and driver training programs. Court documents reveal that it costs around $18 million per year to keep a team active and participating during the full season of Cup Series races.
This high bill prevents teams, even the most successful ones, from turning a profit – even if they win the championship.
Some of the most notorious claim include NASCAR forcing teams to buy components and parts from a specific supplier, ownership of premier racetracks that are used exclusively for NASCAR’s competitions, and clauses that prevent teams from participating in other motorsport competitions.
The plaintiffs are expecting to force NASCAR and Jim France to go through a discovery process that involves going through correspondence and key corporate documents pertaining the organization’s 2016 charter agreement. They are also aiming to prevent NASCAR from allowing teams to race in 2025 until the antitrust litigation proceeds.
NASCAR Threatened to Dismantle Charter System If Majority of Teams Did Not Agree
NASCAR introduced a revenue-sharing model in 2016 that gives teams a cut of the money that the organization makes from multiple sources. The agreement contemplates entrance of 36 cars during every Cup Series.
However, the teams criticized the charter system, arguing that it benefitted NASCAR and the France family primarily and gave little to no rights to the teams to influence the organization’s dealings, structures, and rules.
Also read: Best NASCAR Betting Sites in 2024
On September 2024, NASCAR gave the teams a deadline of 48 hours to agree with these clauses or otherwise they would risk losing their charters and their entire investments on these cars as they would be unable to participate in the races.
A total of 13 organizations, mostly unwillingly, signed the agreement. One team even described the experienced as being “coerced” to sign while other compared the situation to putting a gun to their heads.
They even threatened to dismantle the entire system if the majority of the teams did not abide to these rules.
Jordan’s ‘Legend’ Status Adds Significant Weight to the Lawsuit
As a newcomer to NASCAR ownership but a longtime racing fan, Michael Jordan’s involvement adds significant weight to the lawsuit. Jordan stated: “Everyone knows that I have always been a fierce competitor, and that will to win is what drives me and the entire 23XI team each and every week out on the track.”
He added: “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. Today’s action shows I’m willing to fight for a competitive market where everyone wins.”
Also read: F1 Betting Guide 2024 – Best Formula 1 Betting Sites
Jordan’s involvement is particularly noteworthy as he is the first Black majority owner of a full-time racing team in the NASCAR series since legendary driver Wendell Scott. While not all team owners have joined the lawsuit, many have expressed similar concerns.
Rick Hendrick, the NASCAR team owner with the most wins in its history, reportedly signed the new agreement reluctantly, while Jeff Gordon, Hendrick Motorsports vice chairman, expressed fears about sustainability in the sport.
The lawsuit quotes NASCAR Hall of Famer Jimmie Johnson, who is now a team co-owner, saying: “The best thing to be is NASCAR, the second best a driver and the last thing a team owner.” This sentiment encapsulates the frustration felt by many in the NASCAR community regarding the current business model.
Jordan and Front Row Appoint Top-Notch Sports Lawyer
If successful, the lawsuit could push NASCAR to make significant changes in its structure and operations to include a more equitable revenue-sharing model, greater team involvement in the decision-making process, a full-blow restructuring of the charter system, and increased financial stability for teams.
These changes could potentially impact fan’s experience, leading to more competitive racing if teams enjoy better financial conditions. Moreover, it is possible that new teams may enter the sport if race formats and schedules become more flexible and teams starts to be profitable.
Also read: The History of Nike from 1964-2024 – A Masterclass in Growing a Global Brand
The teams have enlisted Jeffrey Kessler, a prominent sports lawyer and co-executive chairman of Winston & Strawn, to represent them. Kessler’s impressive track record includes representing players in all four major North American professional sports, helping push the NCAA toward an era of paid college athletes and winning a landmark equal pay settlement for members of the US national women’s soccer team.
Kessler has outlined a two-pronged approach: seeking a preliminary injunction to allow the teams to race in the next calendar year and pursuing antitrust litigation to address the broader issues raised in the lawsuit.
As the legal proceedings unfold, the outcome could have far-reaching implications for the future of NASCAR and could reshape the relationship between the sports organization and its teams, drivers, and fans.