Federal judge denies motion to recognize NASCAR teams as chartered organizations for next season

 

[November 09, 2024]  By JENNA FRYER

AVONDALE, Ariz. (AP) — A federal judge on Friday denied a motion by two NASCAR teams — one of them owned by Basketball Hall of Famer Michael Jordan — to be recognized as chartered teams as they proceed with their antitrust lawsuit against the stock car series and chairman Jim France.

The motion was signed by federal Judge Frank Whitney of the U.S. District Court of Western North Carolina in Charlotte at the exact same time NASCAR executives were giving their annual “State of the Sport” address at Phoenix Raceway.

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

“I know people are frustrated about that,” Phelps said. "We are not going to negotiate in the media about charters, ever. And we are very happy that 32 of the 36 charters were extended because those were race teams that where the deal that was put on the table for them, the primary big win for the race teams was money.

“I won't go 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 beneficiary of our media deal," he added. "And we did that because the race teams were upside down financially.”

The court decision came down just hours before Cup Series cars hit the track for the first practice session of championship weekend. Tyler Reddick, who drives for Jordan-owned 23XI Racing, is one of four driver in Sunday's winner-take-all finale.

When the ruling came out and NASCAR was informed as executives sat on the stage at Phoenix Raceway, NASCAR chief operating officer Steve O’Donnell quipped: “You can't make it up, for the timing” as he and Phelps declined comment.

Jeffrey Kessler, an antitrust attorney hired by the 23XI and Front Row Motorsports in the legal fight, indicated after Monday’s hearing in Charlotte that the plaintiffs can immediately appeal the ruling.

“We are pleased with the court's decision to expedite discovery and fast track the schedule in our case against NASCAR,” Kessler said Friday. "Although we are disappointed that the preliminary injunction was denied without prejudice and as premature, which we intend to appeal, this denial has no bearing on the merits of our case. My clients will move forward to race in 2025 and fight for a more fair and equitable system in NASCAR that complies with antitrust laws.”

Both 23XI and Front Row Motorsports refused to sign a take-it-or-leave-it charter agreement presented to teams by NASCAR in September, just 48 hours before the playoffs began. The offers came after more than two years of negotiations and 13 of 15 teams signed the deal.

23XI Racing and Front Row accused NASCAR of being “monopolistic bullies” in forcing teams to into what is essentially a revenue-sharing agreement between the sanctioning body and its teams.

Bob Jenkins, owner of Front Row Motorsports, and Michael Jordan, co-owner of 23XI Racing, pose before a NASCAR Cup Series auto race at Talladega Superspeedway, Oct. 6, 2024, in Talladega, Ala. (AP Photo/Butch Dill, File)

NASCAR has since rescinded the offers on charter extensions to 23XI and Front Row, whose current charters expire at the end of the year. The teams are free to operate as “open” teams but the lack of chartered protection denies them an equal share of revenue, a guaranteed spot in the field of 38 races and other provisions.

23XI and Front Row have asked for things to remain status quo as their antitrust case proceeds because the new charters prevent teams from suing NASCAR. Kessler asked that the teams be released from that clause for the duration of the lawsuit.

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

Kessler had argued the plaintiffs asserted they risk losing sponsors while competing as open teams because the sponsors “could abandon (them) if they ... do not qualify for all of their races.” For instance, Kessler said 23XI’s sponsorship agreements require that each sponsored car runs in every Cup Series race, so failure to qualify for a race could reduce the amount of sponsorship money it receives.

The plaintiffs also alleged they will risk the loss of their drivers if their cars are not chartered. Kessler said Reddick is permitted to terminate his contract with the team if there is no charter for his car — and he could leave as the reigning Cup champion should he win on Sunday.

Kessler also argued racing as open teams “could threaten (their) continued existence" as both teams alleged they will lose substantial amounts of revenue without charters.

The judge was not persuaded by the argument. Whitney wrote that showing the “possibility of irreparable harm” was not sufficient to win an injunction and “the required irreparable harm must be neither remote nor speculative, but actual and imminent.”

“That is, although plaintiffs allege they are on the brink of irreparable harm, the 2025 racing season is months away — the stock cars remain in the garage,” the judge added. “Plaintiffs have not alleged that their business cannot survive without a preliminary injunction. Instead, they allege that their businesses may not survive without a preliminary injunction.”

Whitney said if circumstances change, the two teams can file a new motion for a preliminary injunction. The teams were given a deadline of Dec. 2 to respond.

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