Jordan’s NASCAR team among 2 denied charter status in lawsuit

AVONDALE, Ariz. – A federal judge on Friday rejected a request by two NASCAR teams – one owned by NBA Hall of Famer Michael Jordan – to be recognized as charter teams while they proceed in an antitrust case against the stock car series and chairman Jim France.

The motion was signed by federal Judge Frank Whitney of the US District Court of Western North Carolina in Charlotte as NASCAR executives held their annual “State of the Sport” address at Phoenix Raceway.

NASCAR President Steve Phelps opened the speech by noting that series officials have not discussed charter negotiations in the more than two-year process and would not start now.

“I know people are frustrated about it,” Phelps said. “We’re never going to negotiate in the media about charters. And we’re very happy that 32 of the 36 charters were extended because they were racing teams where the deal that was put on the table for them was the primary big win for the racing teams was money.

“I won’t get into what the money split looks like, but what I will say is that the amount of money it now puts the race teams starting in ’25 as the single largest recipient of our media deal. And we did it , because the racing teams were upside down financially.”

The court’s ruling came just hours before Cup cars hit the track for the first practice session of the championship weekend. Tyler Reddick, who drives for Jordan-owned 23XI Racing, is one of four drivers who could win the title in Sunday’s winner-take-all finale in Phoenix.

When the ruling came down and NASCAR was informed, as executives sat on stage at Phoenix Raceway, NASCAR chief operating officer Steve O’Donnell said, “You can’t make it up, because of the timing,” as he and Phelps declined to comment on the injunction.

Antitrust attorney Jeffrey Kessler indicated after Monday’s hearing in Charlotte that the plaintiffs may immediately appeal the ruling.

“We are pleased with the court’s decision to expedite discovery and expedite the timeline in our case against NASCAR,” Kessler said in a statement. “While we are disappointed that the preliminary injunction was denied without preconditions and as premature, which we intend to appeal, this denial has no bearing on the merits of the case.

“My clients will move forward to race in 2025 and fight for a more fair and just system in NASCAR that complies with antitrust laws.”

At issue is that both 23XI and Front Row Motorsports refused to sign a take-it-or-leave-it charter agreement that was presented to the teams by NASCAR in September just 48 hours before the playoffs began. The offers came after more than two years of negotiations between NASCAR and its teams, with 13 of 15 organizations signing the deal.

23XI Racing and Front Row Motorsports declined to sign and have accused NASCAR of being “monopolistic thugs” in what is essentially a revenue-sharing agreement between the sanctioning body and its teams.

NASCAR has since rescinded the charter extension offers for 23XI and Front Row. Their current charter expires at the end of the calendar year.

The two teams are free to operate as “open” teams, but the lack of charter protection denies them an equal share of revenue, a guaranteed place in the field for races and other provisions under the charter agreements.

23XI and Front Row have asked that things remain status quo while their antitrust case continues because the new charters, which begin in 2025, prevent teams from suing NASCAR. Kessler asked that the teams be released from this clause during the trial.

In his decision, the judge found that Kessler failed to demonstrate that 23XI and Front Row “will face irreparable harm through multiple avenues.”

Kessler had argued that the plaintiffs argued that they will risk losing sponsors while competing as open teams because the sponsors “could abandon (them) if they … don’t qualify for all their races.”

For example, Kessler said 23XI’s sponsorship deals require each sponsored car to run in every Cup Series race, so failing to qualify for a race could reduce the amount of sponsorship money it receives.

The plaintiffs also claimed that they will risk losing their drivers if their cars are not chartered. Kessler said 23XI driver Reddick is allowed to terminate his contract with the team if there is no charter for his car.

Kessler also argued for racing as open teams “could threaten (their) continued existence”, as both teams claimed they would lose significant amounts of revenue without charters. The plaintiffs argued that they may lose goodwill with fans and sponsors if they do not qualify for a race.

But Whitney wrote that a plaintiff seeking a preliminary injunction must “show that irreparable harm is likely in the absence of an injunction” and that a showing of “the possibility of irreparable harm” is not sufficient.

Furthermore, Whitney wrote “the requisite irreparable harm must be neither remote nor speculative, but actual and imminent.” He said “even though Plaintiffs have alleged that they will face a risk of irreparable harm, they have not sufficiently alleged present, immediate, pressing irreparable harm, but rather only speculative, possible harm. That is, even if Plaintiffs allege, that they are on the brink of irreparable damage, the 2025 race season is months away – the stock cars remain in the garage.”

“Plaintiffs have not alleged that their business cannot survive without a preliminary injunction,” Whitney said. “Instead, they argue that their businesses may not survive without a preliminary injunction.”

Whitney found that Kessler did not meet the burden required for a preliminary injunction, but if circumstances change, the plaintiffs can file a renewed motion for a preliminary injunction. The teams were given a deadline of December 2 to respond.