23XI Racing, Front Row Motorsports file lawsuit against NASCAR UPDATE 3

10/03/2024 03:15 AM

UPDATE 3 – 23XI Statement: 23XI Racing and Front Row Motorsports today jointly filed an antitrust lawsuit in the Western District of North Carolina against the National Association for Stock Car Auto Racing (NASCAR) and its CEO Jim France, arguing that the stock car racing circuit and its leadership have used anti-competitive practices to prevent fair competition in the sport.

In a joint statement, 23XI Racing and Front Row Motorsports said, "We share a passion for racing, the thrill of competition, and winning. Off the racetrack, we share a belief that change is necessary for the sport we love. Together, we brought this antitrust case so that racing can thrive and become a more competitive and fair sport in ways that will benefit teams, drivers, sponsors, and, most importantly, fans."

NASCAR and the France family operate without transparency, have stifled competition, and control the sport of stock car racing in ways that unfairly benefit them at the expense of team owners, drivers, sponsors, partners, and fans, through the following anti-competitive practices:

• Buying a majority of the premier racetracks that are exclusive to NASCAR races;
• Imposing exclusivity deals on NASCAR-sanctioned racetracks;
• Acquiring Automobile Racing Club of America (ARCA), the only notable stock car racing series competitor;
• Preventing teams from participating in any other stock car races, while also retaining ownership over Next Gen parts and cars; and
• Forcing teams to buy their parts from single-source suppliers chosen by NASCAR.

No other major professional sport in North America is run by a single family that enriches themselves through these kinds of unchecked monopolistic practices.

Central to the lawsuit are the original NASCAR charters adopted in 2016 and the recently updated 2025 agreements, which the 23XI and Front Row Motorsports teams did not sign because of the unfair terms. After more than two years of attempted negotiations over the 2025 agreements, during which NASCAR continually stonewalled and refused to engage constructively, we concluded that litigation was the only way to address the anti-competitive practices of NASCAR and the France family.

In the coming days, we will file a preliminary injunction to enable our teams to race in the next calendar year under the 2025 charter agreement, while continuing to pursue our antitrust litigation. The filing will seek discovery from both NASCAR and Jim France related to their exclusionary practices and intent to insulate themselves from any competition. 23XI Racing and Front Row Motorsports will seek treble damages for the anti-competitive terms that teams have been subject to under the 2016 charter agreement.

23XI Racing was founded in 2020 by Denny Hamlin, Michael Jordan, and Curtis Polk, and Front Row Motorsports is owned by Bob Jenkins and has been racing full-time since 2005.

23XI Racing and Front Row Motorsports have retained Winston & Strawn LLP as legal counsel, led by Jeffrey Kessler, Winston & Strawn LLP Partner and Co-Executive Chairman.

Denny Hamlin, part-owner of 23XI Racing commented:

"It‘s actually pretty simple in my opinion. When I look around, I see that the best and most competitive sports in the world understand that when teams thrive, fans benefit, and that everyone who invests in making the sport a success should share fairly in that success. With the right changes, we can certainly make that a reality in racing."

Bob Jenkins, Front Row Motorsports team owner added:

"I have been part of this racing community for 20 years and couldn‘t be more proud of the Front Row Motorsports team and our success. But the time has come for change. We need a more competitive and fair system where teams, drivers, and sponsors can be rewarded for our collective investment by building long-term enterprise value, just like every other successful professional sports league."

Michael Jordan, co-owner of 23XI Racing said:

"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. 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."

Curtis Polk, co-owner of 23XI Racing added:

"A true partnership, not dictatorship, is our goal. For over two years, I have dedicated myself to championing a more fair and transparent system within NASCAR, where we recognize the importance of the France family and the sanctioning body, but do what is best for all stakeholders. The charter that was forced on the teams with only hours‘ notice does not accomplish these objectives. The new charter is an attempt to further marginalize the teams‘ voices in the sport and consolidate control and the power in the hands of the France family for their sole benefit. I hope our actions today lead to a future of collaboration for this great sport we love."

— 23XI Racing —

UPDATE 2 10-2-2024: In a teleconference Wednesday morning with reporters, Kessler said that this case has similarities with other sports antitrust litigation where a fundamentally unfair system has been created for the participants. But this case also has a major difference — the France family (one small group of individuals) controls NASCAR.

“There is no other major sport where one family has run that sport as its own personal fee stub and piggy bank the way that NASCAR has been run,” Kessler said.

“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.”

…

Both teams said they would continue with their 2025 plans.

— Fox Sports —

AND: Kickin the Tires has posted the complete PDF of the lawsuit.

UPDATE 10-2-2024: The lawsuit seeks details from NASCAR and France "related to their exclusionary practices and intent to insulate themselves from any competition." [Jeffrey Kessler, a top antitrust attorney] said he would ask for a preliminary injunction that will enable the two teams to compete in 2025 under the new charter agreement while the litigation proceeds.

The teams said they will seek treble damages for anti-competitive terms that have ruled the sport since the initial 2016 charter agreement.

…

NASCAR, based in Daytona Beach, Florida, had no immediate comment.

— Associated Press —

ORIGINAL POST 10-2-2024: Two NASCAR teams, including one owned by basketball icon Michael Jordan, accused NASCAR of being a monopoly in a joint antitrust lawsuit filed Wednesday morning in federal court.

23XI Racing, the team co-owned by Jordan and three-time Daytona 500 winner Denny Hamlin, joined with Front Row Motorsports to allege NASCAR and its CEO Jim France have used "anticompetitive and exclusionary practices" to "enrich themselves at the expense of the premier stock car racing teams."

…

NASCAR did not offer an immediate comment as it is reviewing the filing.

The teams claim that while even the winningest organizations struggle to break even, NASCAR has unlawfully blocked the formation or growth of any other series — thus forcing competitors "to accept take-it-or-leave-it economic conditions" in order to participate.

— The Athletic —

AND: 23XI and Front Row Motorsports issued a joint statement Wednesday morning:

“We share a passion for racing, the thrill of competition, and winning. Off the racetrack, we share a belief that change is necessary for the sport we love. Together, we brought this antitrust case so that racing can thrive and become a more competitive and fair sport in ways that will benefit teams, drivers, sponsors, and, most importantly, fans’.”

Joint statement from 23XI Racing and Front Row Motorsports. https://t.co/OJiFZh3Ljtpic.twitter.com/eIroHelz9R

— Front Row Motorsports (@Team_FRM) October 2, 2024

23XI Racing and Front Row Motorsports have filed a lawsuit on anti-trust grounds against NASCAR in federal court in North Carolina. The opening sentence: pic.twitter.com/BX7881Y6kX

— Bob Pockrass (@bobpockrass) October 2, 2024