Michael Jordan’s 23XI and #2 team sue NASCAR over revenue sharing model

CHARLOTTE, N.C. (AP) — Two NASCAR teams, one owned by Michael Jordan, filed a federal antitrust lawsuit against the stock car series and its president, Jim France, on Wednesday, claiming the new contract system limits competition by unfairly tying teams to the series. his scars and its suppliers.

23XI Racing and Front Row Motorsports filed suit in the Western District of North Carolina in Charlotte after a two-year standoff. contentious negotiations It is among 15 contracting organizations in the series’ flagship Cup Series with the privately owned National Stock Car Auto Racing Association.

“The France family and NASCAR are monopolistic tyrants,” the teams said in the lawsuit, a copy of which was obtained by The Associated Press. “And bullies will continue to impose their desire to harm others until their targets stand up and refuse to be victims. “Now that moment has come.”

NASCAR rolled out its final proposal for what was essentially a revenue share model in early September; 13 organizations signed on, and most said they did so under pressure or felt threatened.

However, the 23XI Racing team, co-owned by Jordan and veteran driver Denny Hamlin, and the smaller Front Row team refused to sign. They hired Jeffrey Kessler, a leading antitrust attorney who represents players in all four major professional North American sports, helped move the NCAA toward the era of paid college athletes, and won a landmark equal pay settlement For members of the US national women’s soccer team.

The lawsuit seeks details from NASCAR and France “regarding their exclusionary practices and intent to isolate themselves from any competition.” Kessler said he will seek an injunction that would allow the two teams to compete under the new contract in 2025 while the case continues.

The teams said they would seek triple damages for the anti-competitive conditions that have dominated the sport since the initial contract agreement in 2016.

“Everyone knows I have always been a fierce competitor, and that desire to win is what drives me and the entire 23XI team out on the rink every week,” said retired NBA superstar Jordan. “I love the sport of racing and the passion of our fans, but the way NASCAR operates today is unfair to the teams, drivers, sponsors and fans. Today’s action shows that I am willing to fight for a competitive marketplace where everyone wins.”

NASCAR, headquartered in Daytona Beach, Florida, had no comment on the matter.

What is the condition?

Introduced in 2016, the charter system included revenue sharing and other elements of the business for the top motorsports series in the United States, guaranteeing 36 entries into each lucrative Cup Series race. The lawsuit states that only eight of the 19 team owners given contracts in 2016 remained in the sport.

One of the teams that left was Furniture Row Motorsports, which sold its contract for $6 million at the end of the 2018 season — a year before it won the Cup Series championship — proof that contracts were corrupting the teams, the plaintiffs said. to profitability.

The original contracts ran from 2016 to 2020 and were automatically renewed to run until December 31, 2024. As the deadline approached, teams argued that the revenue split was unfair and demanded a larger share of the pot.

Front Row owner Bob Jenkins argued that he has never made a profit since he founded his team in 2005. He won the Daytona 500 with driver Michael McDowell in 2021, and even in that banner season he couldn’t break even.

Jenkins, who has four sons and wants to leave something to his family, said he wants 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 is time for change,” Jenkins said. “Like other successful professional sports leagues, we need a more competitive and fair system where teams, drivers and sponsors can be rewarded for our collective investments, creating long-term corporate value.”

What do teams want?

During negotiations, teams demanded more revenue, a say in governance and rule-making, and a cut of deals that NASCAR made from participants’ names, images and likenesses.

Teams also wanted the contracts to be permanent; France refused.

According to the lawsuit, NASCAR submitted the take-it-or-leave-it offer 48 hours before the playoffs began on Friday, Sept. 6. He said NASCAR threatened teams to sign the more than 100-page agreement or they risk losing not only their contracts but the contract system itself unless a “significant number of teams” agree.

“Teams knew that fielding a NASCAR car had become so expensive that it would be economically devastating for most to compete without the modest revenue sharing and stability that the charter system provided, and the complete loss of charter values ​​that the charter system would otherwise have discontinued,” he claimed. is suing.

Rick Hendrick, the winningest owner in NASCAR history, says he has signed just because it’s worn out through negotiations. 23XI Racing and Front Row resisted, but their motivations remained unclear until Wednesday’s court filing.

What does the lawsuit allege?

The lawsuit alleges that NASCAR violated the Sherman Antitrust Act by preventing any stock car racing team from competing at the track “without agreeing to anti-competitive terms.”

“Faced with a take-it-or-leave-it offer and no opportunity to compete in premier class auto racing in the United States, most teams concluded they were obligated to sign the contract,” the lawsuit states. “One team described the signing as ‘forced’, while another said it was ‘under pressure’.

“A third team said NASCAR ‘held a gun to our heads’ and ‘we were forced to sign.’ Fourth, he described NASCAR’s tactics as those of the ‘communist regime’. “None of these teams would allow their identities to be made public for fear of retribution from NASCAR.”

How did it get here?

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

The lawsuit alleges that until 2016, NASCAR operated under annual contracts that did not provide any team with long-term durability. There was no guaranteed entry or prize money into any Cup Series event, and teams were dependent on individual sponsorships that they had to find themselves.

This model made sustainability nearly impossible for any team owner trying to operate solely as a racing team without additional outside business. Pursuing sponsorships became a full-time job, and teams often found themselves competing directly with NASCAR for financial deals.

According to the lawsuit, the teams felt they were operating in a “permanent state of financial vulnerability” that was driving some of the most successful organizations into bankruptcy. He mostly quotes NASCAR Hall of Famer Jimmie Johnson, who retired as a driver and co-owned a fledgling Cup Series team.

“In the words of NASCAR Hall of Famer Jimmie Johnson, the best thing is NASCAR, the second best is a driver, and the last is a team owner,” the lawsuit states.

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