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Michael Jordan is the next face of a professional sports league, and it’s not basketball this time. In 2020, Michael Jordan co-founded 23XI Racing LLC, a National Association of Stock Car Auto Racing (“NASCAR”) team, with Denny Hamlin, a professional stock car racing driver.[1] However, on October 2, 2024,[2] 23XI Racing LLC filed suit alongside Front Row Motorsports Inc., another NASCAR team, against NASCAR alleging exclusionary practices and monopolizing premier motorsport racing.[3] Specifically, the allegations claim NASCAR is violating Sections 1 and 2 of the Sherman Antitrust Act,[4] and the lawsuit was filed shortly after the two NASCAR teams refused to sign the NASCAR Charter Agreement in September 2024.[5]
Section 1 of the Sherman Act finds, “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”[6] Additionally, Section 2 of the Sherman Act states, “every person who shall monopolize, or attempt to monopolize . . . any part of the trade or commerce among the States . . . shall be deemed guilty of a felony.”[7]
The complaint against NASCAR claims it violates the Sherman Antitrust Act (“Act”) due to limiting stock car racing teams’ ability to compete on the circuit, “without accepting the anticompetitive terms” of the charter.[8] The Plaintiffs allege NASCAR sustained a monopoly by implementing technical regulations and specifications for racing cars, by acquiring racing circuits and tracks, by creating contracts to limit the availability of tracks suitable to handle premier stock car racing, and by prohibiting teams competing in the NASCAR CUP series from participating in races not affiliated with NASCAR.[9] Further, the complaint alleges that in 2019, NASCAR acquired the International Speedway Corporation, which allowed the corporation to oversee thirteen of the nation’s top racetracks.[10] The complaint states the following:
Faced with a take-it-or-leave-it offer, and no competing opportunity for premier stock car racing in the United States, most of the teams concluded that they had to sign. One team described its signing as “coerced,” and another said it was “under duress.” A third team said, NASCAR “put a gun to our head[s]” and we “had to sign.” A fourth described NASCAR’s tactics as that of a “communist regime.” None of these teams would permit their identities to be publicly revealed for fear of retribution from NASCAR.[11]
Unlike other professional sports leagues like the National Football League (“NFL”), where teams are separate business entities owned and operated separately, NASCAR oversees all teams.[12] Accordingly, each NFL team receives high revenues when broadcast deals are secured.[13] Conversely, the broadcasting deals for NASCAR teams only generate high profits for the France family, owner of the NASCAR franchise.[14]
NASCAR’s alleged exclusionary practices have a long history. According to the lawsuit, since NASCAR’s founding in 1948, the France family has owned and controlled the enterprise, penalizing drivers for unfavored behavior.[15] For example, in 1950, Bill France Sr. was furious when “his” drivers participated in a race unaffiliated with NASCAR and subsequently removed several drivers’ championship points.[16]
Motivation for this lawsuit involves NASCAR teams looking for more revenue; part of the profit NASCAR generates from the name, image, and likeness of participants; and more of a voice in rule making.[17] Further, the teams are looking to make the charters permanent, something France has refused.[18]
Generally, charter agreements guarantee teams’ entry to the races, allow teams to generate profits, and provide a route to ownership in the NASCAR CUP Series.[19] In 2016, NASCAR determined the teams that would be presented with a charter agreement by evaluating their commitment to racing, selecting the teams that tried to qualify every week in the past three years.[20] Ultimately, NASCAR presented 36 teams with a charter agreement to promote stability within the teams and to encourage business reliability.[21] However, Plaintiffs allege NASCAR coerced the teams to sign the agreement or face losing the charter system. Currently, the NASCAR Cup Series field includes 40 cars comprised of 36 Charter teams and four (“open”) non-Charter teams.[22]
To establish the antitrust claim, the Plaintiffs will need to show NASCAR’s conduct violates a relevant market.[23] Here, the Plaintiffs argue the United States is the only relevant geographic market because it’s the only country with a premier stock racing series.[24] The Plaintiffs also allege the premier stock car racing teams are the relevant market. [25] Although NASCAR competes with IndyCar and Formula 1 for the attention of a similar fan base and professional opportunities, the Plaintiffs claim stock car racing is distinct from other types of automobile racing, and therefore, does not belong to the same market for antitrust purposes.[26]
Nonetheless, NASCAR has defenses available to challenge the Plaintiffs’ antitrust claims. Because Section 1 requires conspiratorial conduct, NASCAR could argue it is a single entity and as such cannot be in violation of the Act.[27] Further, while the lawsuit also names France as a co-defendant, France acts in conjunction with NASCAR, not separately from it.[28] Therefore, NASCAR may also argue its alleged exclusionary practices are in the best interest for the business and its teams.[29] As for Section 2, the Plaintiffs allege NASCAR has no rival.[30] However, NASCAR can argue it competes for the same fans’ attention as Formula I, IndyCar, and any other professional sports leagues.[31]
According to several team owners, Jim France, France Sr.’s son, and NASCAR’s current chairman had no plans to make the charters permanent.[32] In the meantime, without knowing the outcome of the litigation, the Plaintiffs seek an injunction to prevent NASCAR from revoking the team charters.[33]
Following the Plaintiffs’ motion for expedited discovery, NASCAR argued the Plaintiffs are using the antitrust discovery process as a “weapon” to harm the company and to seek documents dating before the four-year statute of limitations for antitrust claims.[34] The Plaintiffs’ counsel, Jeffrey Kessler contends the documents are relevant to the present litigation because they demonstrate NASCAR’s history of anticompetitive conduct.[35]
Consequently, NASCAR should prepare for a long race down the track because Michael Jordan isn’t likely to back down anytime soon.
[1] Mike Scarcella, Nascar fights teams’ injunction bid in racing antitrust case, Reuters (Oct. 24, 2024), https://www.reuters.com/legal/litigation/nascar-fights-teams-injunction-bid-racing-antitrust-case-2024-10-24.
[2] Ryan McGee, Jordan, Hamlin vs. NASCAR: Stock Cars Will Never Be the Same, ESPN (Oct. 11, 2024), https://www.espn.com/racing/nascar/story/_/id/41737581/michael-jordan-denny-hamlin-23xi-front-row-motorsports-vs-nascar-stock-cars-never-same.
[3] Elaine Briseño, Michael Jordan’s Race Team Sues NASCAR Over Monopoly, Law360 (Oct. 2, 2024), https://www.law360.com/articles/1885795/michael-jordan-s-race-team-sues-nascar-over-monopoly?copied=1.
[4] Michael McCann, Michael Jordan’s NASCAR Antitrust Case Could Face Yellow Flags, Sportico (Oct. 3, 2024, 9:30AM), https://www.sportico.com/law/analysis/2024/nascar-antitrust-case-defenses-1234799661.
[5] Toby Christie, Michael Jordan’s Race Team Among Two NASCAR Cup Teams Suing NASCAR, Racing America on Si (Oct. 3, 2024), https://www.si.com/onsi/racing-america/news/michael-jordan-s-race-team-among-two-nascar-cup-teams-suing-nascar-01j96j27nwdb.
[6] 15 U.S.C. § 1.
[7] 15 U.S.C. § 2.
[8] Jenna Fryer, Michael Jordan’s 23XI and a 2nd Team Sue NASCAR Over Revenue Sharing Model, The Associated Press (last updated Oct. 2, 2024, 8:22 AM), https://apnews.com/article/nascar-antitrust-lawsuit-jordan-bded312b0330122249824cbc059dabf5.
[9] Briseño, supra note 2; see also 2311 Racing LLC v. Nat’l Ass’n for Stock Car Auto Racing, LLC and James France, No. 3:24-cv-886, at 4 (W.D. N.C. 2024) (complaint).
[10] Briseño, supra note 3.
[11] 2311 Racing, No. 3:22-cv-01234, at 8 (complaint).
[12] Briseño, supra note 3.
[13] Briseño, supra note 3; Albeit the NFL is currently under fire concerning their alleged exclusionary practices for broadcasting deals. See also Ani Tarakchyan, Sunday Ticket Tackle: Antitrust Claims Against the NFL, Loyola of Los Angeles Entertainment Law Review News & Insights (Oct. 1, 2024), https://entertainmentlawreview.lls.edu/sunday-ticket-tackle-antitrust-claims-against-the-nfl.
[14] Id.
[15] Sulaiman Abdur-Rahman, ‘Stock Car Monopoly’?: Winston Lawsuit Alleges NASCAR Anticompetitive Scheme, NATIONAL LAW JOURNAL (Oct. 3, 2024), https://www.law.com/nationallawjournal/2024/10/03/stock-car-monopoly-winston-lawsuit-alleges-nascar-anticompetitive-scheme/?slreturn=20241005165545.
[16] Elizabeth Blackstock, NASCAR Lawsuit: All the Allegations of Monopoly-like Behavior Against the Cup Series, PlanetF1 (Oct. 4, 2024, 8:00 PM), https://www.planetf1.com/features/nascar-lawsuit-allegations-monopoly-behavior; see also Samuel Stubbs, NASCAR’s Ever-Present Iron Fist Rears Its Ugly Head Amid Latest Charter Drama, Yardbarker (last updated Sept. 8, 2024), https://www.yardbarker.com/nascar/articles/nascars_ever_present_iron_fist_rears_its_ugly_head_amid_latest_charter_drama/s1_13132_40861759 (NASCAR penalizing Lee Petty for participating a race it didn’t sanction by removing his championships points).
[17] Briseño, supra note 3.
[18] Id.
[19] Cian Brittle, What’s Going on With Nascar’s Charter System?, Blackbook Motorsport (Aug. 5, 2024), https://www.blackbookmotorsport.com/features/nascar-charter-agreement-sponsorship-2025; see also Staff Report, How the NASCAR Charter System Works, NASCAR (Nov. 26, 2019), https://www.nascar.com/news-media/2020/09/22/how-the-nascar-charter-system-works.
[20] Id.
[21] Id.
[22] Id.
[23] McCann, supra note 4.
[24] Id.
[25] Id.
[26] Id.
[27] McCann, supra note 4.
[28] Id.
[29] Id.
[30] 2311 Racing, No. 3:22-cv-01234, at 4 (complaint).
[31] McCann, supra note 4.
[32] Jenna Fryer, NASCAR Has Finalized a New Charter Agreement. Team Co-Owner Michael Jordan Won’t Sign It, The Associated Press (last updated Sept. 9, 2024, 2:39 PM), https://apnews.com/article/nascar-charters-michael-jordan-423f18857461af57fc7da7bd7f2dd130.
[33] 2311 Racing, No. 3:22-cv-01234, at 10 (complaint).
[34] Michael McCann, Michael Jordan, NASCAR Escalate Feud With Antitrust Brief, Sportico (Oct. 24, 2024), https://www.sportico.com/law/analysis/2024/nascar-lawsuit-michael-jordan-antitrust-briefs-1234802520.
[35] Id.