A federal jury trial commenced on Monday, November 11, 2024, in Charlotte, North Carolina, regarding an antitrust lawsuit filed against NASCAR by 23XI Racing and Front Row Motorsports. The legal proceedings are anticipated to last two weeks.
The lawsuit, which involves allegations of anticompetitive practices, has brought to light internal communications and financial details of NASCAR, alongside disagreements among executives and participants within the sport.
Prior to the trial, Denny Hamlin, co-owner of 23XI Racing, issued a public statement via social media, indicating the impending trial would reveal facts and lead to changes. NASCAR Commissioner Steve Phelps stated that attempts were made to settle the case before trial.
The Lawsuit's Basis
Basketball Hall of Famer Michael Jordan, along with Denny Hamlin and Jordan's business manager Curtis Polk, own 23XI Racing. They are joined in the lawsuit by Front Row Motorsports, owned by entrepreneur Bob Jenkins, winner of the 2021 Daytona 500. These two teams were the only ones among 15 that declined to sign renewals for the charter agreements presented by NASCAR in late 2024.
All 15 teams had engaged in over two years of negotiations to achieve more favorable charter agreement terms. The final terms did not meet the teams' stated objectives. Consequently, 23XI and Front Row accused NASCAR of operating as a monopoly and initiated the lawsuit on antitrust grounds.
Understanding the Charter System
The charter system, implemented in 2016, serves as NASCAR's equivalent of a professional sports franchise model. A charter guarantees a car entry into all 38 races of the 40-car field and specifies a payout from the weekly prize money.
Teams have asserted that the current revenue model is insufficient, even with the existing charters. Their demands included permanent charters (the current ones are renewable and revocable), a larger share of revenues, and a formal voice in governance.
23XI and Front Row determined that the new charter agreements did not fulfill these demands, leading to their refusal to sign. The two organizations contend that NASCAR maintains excessive control over various aspects of the racing series, citing exclusivity clauses, ownership of most Cup schedule racetracks, and control over rules and regulations as evidence of a monopoly. The plaintiffs are also seeking monetary damages to cover legal expenses and financial losses incurred since not being chartered.
NASCAR's Defense
NASCAR, founded 76 years ago by the France family, maintains that it has not violated antitrust law, asserting its business practices do not restrain trade beyond normal operational conduct.
NASCAR argues that the 2025 charter agreement included increased payouts, which it presents as evidence against anticompetitive behavior. The organization also references the option for non-chartered cars to enter races as "open teams" and qualify for one of four available spots based on speed. While 23XI and Front Row's six combined cars successfully qualified for every race as open teams, this status reportedly resulted in millions of dollars in reduced prize money for both organizations. Pretrial discovery revealed NASCAR generated over $100 million in 2024.
Revelations from Discovery
The pretrial discovery phase uncovered contentious internal communications from both NASCAR executives and the plaintiff teams.
NASCAR leadership, including Commissioner Phelps, engaged in discussions where Hall of Fame team owner Richard Childress was referred to with derogatory terms such as "dinosaur," "idiot," and "stupid redneck." These discussions also included statements that Childress "owes his entire fortune to NASCAR" and "needed to be taken out back and flogged." Another NASCAR executive reportedly alleged that fans of the sport possess low literacy levels. Additionally, multiple series leaders criticized Hall of Fame driver Tony Stewart's SRX short-track series and reportedly threatened its discontinuation due to NASCAR driver participation.
Conversely, communications from the plaintiff side revealed the president of 23XI stating that NASCAR chairman Jim France would need to die for favorable charter terms to be realized. Denny Hamlin acknowledged his disapproval of the France family, one of Jordan's advisers commented on Hamlin's business acumen, and Jordan made a jest about casino losses exceeding his payments to a driver.
Courtroom Participants and Motions
NASCAR has indicated a desire for prominent team owners Rick Hendrick and Roger Penske to testify, both of whom had previously filed motions to avoid deposition or limit questioning. These individuals are among a group of owners who submitted declarations in support of NASCAR's charter system, indicating alignment among non-suing teams who oppose the system's dissolution. However, these declarations also noted that the 2025 charter agreements did not fully address all team demands.
NASCAR has also moved to prevent certain plaintiffs, including Michael Jordan and Denny Hamlin, from being present in court during the trial. This request is reportedly aimed at preventing these high-profile individuals from creating a distraction for the jury. A ruling on this motion was pending as of Sunday afternoon.
Potential Outcomes
Settlement of the case remains possible at any stage, even following a ruling or during an appeal process.
Should 23XI and Front Row prevail, a jury would determine actual monetary damages. Judge Kenneth Bell would then possess the authority to adjust and potentially triple this figure. Judge Bell would also be tasked with implementing remedies for any monopoly determined to exist. Potential remedies for NASCAR could include orders to sell the sport, divest its owned racetracks, dismantle the charter system, or mandate permanent charters.
Conversely, if NASCAR wins, it is projected that 23XI and Front Row may cease operations beyond 2026. The six charters currently held aside would likely be sold to other interested parties. The most recent charter sale was for $45 million, and NASCAR has reported significant interest from potential buyers, including private equity firms.