Michael Jordan’s 23XI, another team sue NASCAR over revenue-sharing model
Cars race into Turn 1 during a NASCAR Cup Series race at Kansas Speedway, Kansas City, on September 29, 2024.
Two NASCAR teams, including one owned by Michael Jordan, filed a federal antitrust lawsuit against NASCAR and chairman Jim France on Wednesday, alleging that the charter system restricts competition by unfairly binding teams to the series, its tracks, and suppliers.
23XI Racing and Front Row Motorsports brought the lawsuit in the Western District of North Carolina in Charlotte after two years of difficult negotiations between NASCAR and the 15 charter-holding teams in the top Cup Series.
“NASCAR and the France family are monopolistic bullies,” the lawsuit stated, according to a copy obtained by The Associated Press. “Bullies continue to harm others until their targets stand up. That moment has arrived.”
In September, NASCAR offered its final proposal for a revenue-sharing system. Thirteen teams signed, many claiming they felt forced to do so under threat.
However, 23XI Racing, co-owned by Jordan and Denny Hamlin, along with Front Row Motorsports, refused to sign. They hired antitrust attorney Jeffrey Kessler, known for representing athletes in major North American sports and securing a historic equal-pay settlement for the U.S. women’s soccer team.
The lawsuit seeks information from NASCAR and France about exclusionary practices and aims to allow the two teams to compete in 2025 under the new agreement while litigation continues. They are also seeking damages for the anti-competitive terms that have governed the sport since the 2016 charter system.
“I’ve always been a fierce competitor,” Jordan said. “Racing is no different. The current system is unfair to teams, drivers, sponsors, and fans. This lawsuit is about creating a competitive market where everyone wins.”
NASCAR declined to comment on the lawsuit. The organization is based in Daytona Beach, Florida.
The charter system introduced in 2016 included revenue-sharing and business elements for the top motorsports series, guaranteeing 36 entries in every Cup Series race. According to the lawsuit, of the 19 original charter holders, only eight remain.
Furniture Row Motorsports, which won a championship in 2017, sold its charter for $6 million in 2018, which the plaintiffs argue proves the system left teams without a path to profitability.
The charters were initially set to last from 2016 to 2020, but were extended through 2024. As the expiration approached, teams demanded a larger share of revenue.
Front Row Motorsports owner Bob Jenkins revealed that he hasn’t turned a profit since forming the team in 2005, even after winning the Daytona 500 in 2021. Jenkins, looking for a stable future for his family, seeks a fairer system.
“I’ve been proud of Front Row Motorsports’ success, but it’s time for change,” Jenkins said. “We need a fair system where teams, drivers, and sponsors are rewarded for their investments, similar to other professional sports leagues.”
During negotiations, teams pushed for more revenue, governance input, and a share of profits from deals involving their names and likenesses. They also requested permanent charters, which France refused.
The lawsuit claims that NASCAR presented a take-it-or-leave-it offer on September 6, days before the playoffs began. It alleges NASCAR threatened to dissolve the charter system unless enough teams signed the agreement.
Teams felt economically pressured to sign the agreement due to the high costs of competing without the revenue-sharing provided by the charter system. Some teams reportedly signed under coercion, according to the lawsuit.
NASCAR’s most successful team owner, Rick Hendrick, said he only signed due to fatigue from the negotiations. The motivations behind 23XI Racing and Front Row Motorsports’ decision to hold out were revealed with the lawsuit.
The lawsuit accuses NASCAR of violating the Sherman Antitrust Act by forcing teams to accept anti-competitive terms without any alternatives for competing in premier stock car racing.
“Most teams felt they had no choice but to sign, given the lack of alternative opportunities in stock car racing,” the lawsuit stated. “Some teams described signing as being ‘coerced,’ while others felt they were ‘under duress.’”
“How did it get to this point?”
NASCAR was founded in 1948 by Bill France Sr. and has been managed by his descendants, including Bill Jr., Brian France, and now Jim France. Bill Jr.’s daughter’s son, Ben Kennedy, is expected to inherit the family business.
The lawsuit claims that NASCAR operated under year-to-year contracts before 2016, which offered no long-term security for teams. Without guaranteed entries or prize money, teams were forced to secure their own sponsorships, making financial stability nearly impossible for many.
Teams operated in a constant state of financial insecurity, with even the most successful organizations struggling to survive, according to the lawsuit. It quotes NASCAR Hall of Famer Jimmie Johnson, now a part-owner of a Cup Series team.
“In the words of NASCAR Hall of Famer Jimmie Johnson, ‘The best position to be in is NASCAR, the second-best a driver, and the worst a team owner,’” the lawsuit said.
