Tuesday, 15 October 2024

Antitrust lawsuit from 23XI Racing, Front Row Motorsports opens NASCAR to unforeseen scrutiny  Featured

Posted On Thursday, 03 October 2024 01:38 Written by
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Denny Hamlin walks the grid during qualifying at Indianapolis Motor Speedway in July. Hamlin's 23XI Racing team, alongside Front Row Motorsports, have filed an antitrust lawsuit against NASCAR. Denny Hamlin walks the grid during qualifying at Indianapolis Motor Speedway in July. Hamlin's 23XI Racing team, alongside Front Row Motorsports, have filed an antitrust lawsuit against NASCAR. Photo by James Gilbert/Getty Images

If Burger King is all about “have it your way”, NASCAR has traditionally been the polar opposite in its approach. 

For the past 75 years, NASCAR’s leadership has resided with the France family (First Big Bill France, followed by Bill France Jr., Brian France and now Jim France). Since it launched, NASCAR has operated its stock car racing operation essentially as it wished.

Sure, drivers and teams and fans can complain about some decisions, but at the end of the day, NASCAR makes the rules, and there isn’t much anyone could do about it.

I mention this all as background for the earthquake news that broke on Wednesday morning that two NASCAR teams — 23XI Racing (co-owned by Michael Jordan and Denny Hamlin) and Front Row Motorsports — have filed an antitrust lawsuit against NASCAR and Jim France.

Signs of trouble began about four weeks back, when it was announced that all Cup teams other than 23XI and Front Row had signed a new charter agreement that would govern the team owners from 2025 through 2031. Many in the sport wondered what the two teams were thinking. What leverage did they have now that all the other teams had signed on to the new deal?

We got our answer Wednesday with this bombshell lawsuit, which puts NASCAR in very unfamiliar territory and opens them up to outside scrutiny. Especially of note is that the two teams’ legal representation is the formidable Jeffrey Kessler, who has had past success battling the NCAA regarding athlete compensation.

Michael Jordan also offered his thoughts on Wednesday after the news broke.

“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,” Jordan stated. “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.”

Lawsuit opens NASCAR to scrutiny

As usual with lawsuits, this is largely about money, specifically whether NASCAR’s business model and the new charter agreement will allow teams to properly “realize a fair return on their investment” and where “drivers can be fairly compensated” and “teams control their intellectual property”.

Before we dive any deeper, let me make one thing clear. I’m not an attorney, so I won’t be offering a detailed legal analysis of how this saga will likely end, or predict what twists and turns will come along the way. The people who can do that are collecting thousands of dollars per hour right now from Michael Jordan and the France family, and I’ll be an interested observer watching it all play out, and keeping an eye out for any impacts on the on-track action.

Throughout this legal saga, I’ll continue to watch and enjoy NASCAR’s races as I have for nearly 30 years. Legal maneuvers notwithstanding, this has been an incredible year for the sport and the future is bright with a talented pipeline of young drivers and more competition than ever each week.

But I do feel confident saying one thing about this whole mess: NASCAR is certainly not thrilled at the possibility of having to open its books up to scrutiny as a part of this lawsuit. Kessler said Wednesday that If the case is not settled, NASCAR’s financial information would be available through discovery.

“That is one of the advantages of federal antitrust litigation,” he said. “We will be able to obtain financial records. We will be able to follow the money. We will be able to see exactly how exploitive this system has been and how much injury it’s inflicted on the teams and drivers.”

Regardless of the final outcome of the lawsuit, this process of discovery and exposing the inner financial workings of the sport would be the least desirable option for the France family. 

Beyond impact on the reputation and pocketbooks of the sport’s founding family, there are some interesting requests that come about in the lawsuit.

Both 23XI and Front Row are seeking a preliminary injunction that would let them operate under the 2025 Charter Agreement until the case is resolved. But fans can breathe easy, as both teams said they will race in 2025 even if they don’t have a charter. (Of note: Both teams currently have agreements to expand to 3 cars, as both are purchasing charters from the disbanding Stewart-Haas Racing.)

Harsh words

This litigation is the least friendly battle the sport has seen in a long while, harkening back to past difficult situations like the driver boycott at Talladega back in 1969 due to concerns about safety.

And the language being used is far from cordial. Kessler did not mince words Wednesday.

"There has never been a case I have found that is as egregiously anti-competitive as this one. We have a sport where one family has used its power to create an absolute monopoly for the benefit of that family, as opposed to being for the benefit of the teams, the drivers, the sponsors, the broadcasters, the fans."

"There is no other major sport where one family has run that sport as its own personal fiefdom and piggy bank,” he added.

“We will see what impact that has in terms of how they try to defend themselves. We will see what impact that has in terms of whether it’s possible to settle this case or whether we have to take it all the way through trial — either way, we’re prepared to do what’s necessary to effectuate change.”

All I can say to that is … Ouch.

And what is Kessler’s goal with the lawsuit?
“One way or another, stock car racing is going to change in this country for the better."

Whether that happens or not, it’s clear the sport has changed over the years, and continues to evolve. One trend in recent years is NASCAR evolving to include elements commonly seen in other major sports (i.e. playoffs, in-season tournament, etc.), in an attempt to grow. New owners have also arrived from the worlds of other sports and entertainment (i.e. Michael Jordan from 23XI and Pitbull at Trackhouse).

With these moves to mirror other sports, it only makes sense that the labor issues facing other sports are now finding their way to NASCAR. And it’s probably inevitable that a larger percentage of revenue eventually makes it way to the teams and drivers, as these issues are not going away.

This could become a defining moment for the sport. Lawsuits can take years, so who knows when a resolution would finally come, but when the dust settles it’s a good bet the sport won’t operate the same way it does today.

And that’s probably a good thing for everyone in the end. 75 years is a long time to do things one particular way, so I can appreciate the fact that these team owners are standing their ground. 

In the meantime, stock up on the popcorn as we all watch it unfold.

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Follow AutoTechReviews on Instagram at @autotechreviews, and on Twitter @AutoTechReview. Follow Matt Myftiu on Twitter @MattMyftiu.



Matt M. Myftiu

Matt Myftiu has been a journalist for two decades with a focus on technology, NASCAR and autos.

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