NASCAR will go on trial this week to defend itself against claims by Michael Jordan’s racing team that the organization has monopolistic power in the market for services to premier stock car teams.
Jordan’s team, 23XI Racing, alleges that NASCAR’s “charter” system for guaranteeing racing spots in the highly prestigious Cup Series is inherently unfair. Racing teams cannot compete at the sport’s highest level without agreeing to the anticompetitive terms of the organization’s charter contracts, 23XI and co-plaintiff Front Row Motorsports Inc assert.
The lawsuit in the U.S. District Court for the Western District of North Carolina could have broad implications for NASCAR, the racing organization run by the France family since 1948.
A verdict against NASCAR could result in damages, straining its finances, while an injunction could weaken its ability to enforce the terms of charter agreements.
“If there’s a massive antitrust ruling finding that what you’re doing is anticompetitive and you have to pay damages for it, you’re really going to have to think long and hard before you continue that practice,” said David Gringer, an antitrust partner at WilmerHale who is not involved in the case.
Latham & Watkins LLP, which represents NASCAR, declined to comment. Winston & Strawn LLP, which represents Jordan’s team and Front Row Motorsports, did not respond to a request for comment.
Jury selection will begin Monday and opening arguments will follow. The trial could last two weeks or more.
Monopoly?
A verdict against NASCAR could also open the door for other parties to sue, including fans who claim they pay too much to attend NASCAR races and television networks alleging that NASCAR charges too much for rights fees, Gringer said.
“And other teams could sue as well,” he said. “The system, even if the court does not order it to be changed, may well be found impractical to maintain.”
Gringer added that Judge Kenneth D. Bell has “broad discretion” to issue various forms of injunctive relief to prevent the fruits of the alleged monopolistic behavior.
Jordan’s Team and Front Row Motorsports continued NASCAR in October 2024, alleging the organization violated Sections 1 and 2 of the Sherman Act.
Last year, Bell granted Jordan’s team a preliminary injunction that allowed them to race as charter holders, but the Fourth Circuit overturned the injunction.
Team Jordan and Front Row fought for protect their charter status but Bell in September denied another request for an injunction, largely because the teams failed to demonstrate that they would suffer irreparable harm.
Bell also noted that NASCAR is committed to allowing 23XI and FrontRow Motorsports to qualify for the remainder of the Cup Series races in 2025.
“This will effectively maintain the status quo pending a final decision on the merits and any permanent injunctive relief after trial (i.e., plaintiffs will be able to run and the challenged charters will not be sold or otherwise transferred),” Bell said in the September order.
The parties attempted to reach a settlement, but were unsuccessful.
Monopoly claims
A key argument in this case is whether NASCAR gained notoriety in the United States due to anticompetitive behavior or sound business decisions and investments over the past 77 years.
In November, Bell governed for Jordan’s team and Front Row on a preliminary legal issue, agreeing that NASCAR has monopsony power in the relevant market, meaning it controls prices and terms.
“It’s much easier than the typical case of monopolization because the market and monopoly power are already decided,” Gringer said. “The plaintiff here has already won on this issue. That’s huge.”
NASCAR argued that the teams lacked status and failed to prove market power, and simply “gerrymandered» their definition of the market.
In a sports case, it’s often difficult to distinguish whether the issue at hand is a genuine commercial dispute or whether it rises to the level of an antitrust complaint, said Barbara T. Sicalides, a partner at Troutman Pepper Locke.
Here, the jury will determine whether the terms of NASCAR’s charter contracts are so restrictive that they harm competition.
“A lot of people think everyone is a monopoly, but the reality is it’s legal to be a monopoly; it’s just not legal to obtain your monopoly or maintain it through anticompetitive behavior,” Sicalides said.
The case is 2311 Racing LLC v. NASCARWDNC, No. 3:24-cv-00886.
