Should the legal proceedings between NASCAR and the two teams suing it on antitrust claims continue into next season, that campaign could feature 32 chartered teams each race, according to a legal filing on Wednesday by the league.
NASCAR met the court mandated deadline to file a response to 23XI Racing and Front Row Motorsports, the organizations filing suit against the sanctioning body, asking for a preliminary injunction that would allow both teams and each of its cars to compete next season under the charter agreement that formed the basis of disagreement between the two parties.
The short version of this story, which can be detailed here and here, is that the two teams ultimately chose not to sign the 2025-to-2031 version of the document that serves as something of a revenue sharing and governance protocol for Cup Series competition.
The document provides guaranteed revenue to each team holding a figurative token and the amount paid is based off a three-year rolling average of championship standings final position, a number that has been shortened to two seasons in the new agreement.
23XI Racing, which is co-owned by sporting legend Michael Jordan and veteran driver Denny Hamlin, in addition to Front Row Motorsports, owned by restaurant franchisee Bob Jenkins, sued NASCAR and chairman Jim France using the argument that the league is a monopoly that unjustly enriches itself at the expense of competing teams.
NASCAR, in its limited counter filings thus far has argued that previous attempts to legally portray the league as a monopoly have fallen short, and that 13 of the 15 organizations that compete in the Cup Series ultimately chose to sign the charter system extension.
Several team owners have said they felt ‘coerced,’ ‘gun to our heads,’ forced to sign the document, privately, citing the inability to run a business without it. Richard Childress has said as much publicly.
23XI and Front Row filed the injunction with the hope that it could be included in the system until the legal process concludes, citing the financial impact of competing as an open team, those without a charter who earn limited winnings and no guaranteed revenue.
Both teams have said they intend to race next season no matter what, even without charters, and NASCAR used that sentiment as the primary basis for why it opposes the preliminary injunction motion:
“The deadline for Plaintiffs to sign 2025 Charter Agreements expired weeks ago, and NASCAR has taken steps, consistent with its contractual obligations to other Charter Teams, to plan for a season with only 32 Charters. Plaintiffs do not need these Charter Agreements to race, and indeed have stated publicly that they will be racing in NASCAR regardless.2 The idea that Plaintiffs would race without a Charter is not new or unprecedented; in fact, both Front Row and 23XI ran so-called Open cars in addition to their Charter cars in the 2023 Daytona 500, finishing in 13th and 11th places, respectively.3 As Defendants’ forthcoming opposition to Plaintiffs’ Motion for a Preliminary Injunction will make clear, the Court should deny the requested injunctive relief.”
23XI Racing currently fields two cars for Tyler Reddick and Bubba Wallace, respectively, but has agreed (at least in principle) to have purchased one of the three charters made available in the closure of Stewart-Haas Racing with Front Row Motorsports acquiring another one for a third driver to pair with Todd Gilliland and Noah Gragson.
NASCAR cited only four of the cars, because it would have to approve the transaction of any charter, and the team currently called Stewart-Haas, which will downsize into a one-car operation called Haas Factory Team, signed the agreement.
The league did not indicate in the filing if it would approve the sale of two of the charters to Front Row and 23XI Racing. Trackhouse Racing acquired the third. NASCAR said in its legal filing that it would allocate the money that would have been put towards 36 charters into increasing monies paid to the 32 active charters.
NASCAR also took exception, within the text of the filing, to 23XI Racing and Front Row not immediately filing a preliminary injunction motion upon not signing the charter agreement and subsequent lawsuit but instead conducting press conferences and podcast appearances with lead lawyer Jeffrey Kessler.
“NASCAR carries contractual obligations to the 13 teams that accepted its offers of 2025 Charters, and consistent with the terms of the 2025 Charters, NASCAR is working on reallocating funds that Plaintiffs would have received to increase prize money and other special awards for the 2025 season for the benefit of teams that timely executed 2025 Charters, as well as Open teams who can compete to win the increased prize money and other special awards.
“Weeks after rejecting NASCAR’s offer of 2025 Charter Agreements, Plaintiffs filed this instant action on October 2, 2024. Plaintiffs did not seek either expedited discovery or a motion for preliminary injunction at that time; instead, Plaintiffs’ counsel focused on podcast appearances and statements to the press.9 On October 9, Plaintiffs filed a Motion for a Preliminary Injunction, asking this Court to: (1) effectively rewrite the 2025 Charter Agreement (by stripping it of Section 10.3 though not Section 10.4) and (2) require NASCAR to provide those bespoke Charters each to Front Row and 23XI, which differ from those signed by the other 13 teams. Despite Plaintiffs’ allegations that the Charter Agreements are anticompetitive and that they will not be able to compete as Charter members in the 2025 season at all, Front Row and 23XI each entered into agreements to acquire other team’s Charters, subject to NASCAR’s approval of such transfers. Accordingly, Plaintiffs also ask the Court to: (1) require Defendants to approve those Charter transfers and (2) retroactively excise Section 10.3 from those signed agreements. And again, Plaintiffs seek to have this Court eliminate Section 10.3 while at the same time leaving in place the reciprocal release the racing teams first obtained from NASCAR during the negotiations for the 2016 Charter, as set forth in Section 10.4.
“Regardless of whether Plaintiffs receive their requested preliminary injunction, Plaintiffs have publicly stated that they intend to race in NASCAR next year, even as Open teams.”
The teams must prove to the court that ‘severe and irreparable’ damage would result from not operating as a chartered team. NASCAR has said that damages paid out in the case of a judgement against it would cover quantifiable loss of revenue in a filing last week.
“Plaintiffs cannot establish irreparable harm since Plaintiffs and their counsel have confirmed that Plaintiffs’ teams will compete as open teams in 2025, which means that money damages can compensate Plaintiffs even if they were to ultimately prevail; and 3) Plaintiffs cannot establish a likelihood of success on the merits for multiple reasons, including that this is a dispute over contract terms, not an antitrust case.”
NASCAR has also motioned to dismiss expedited discovery, the opening of books for both parties.
“Plaintiffs cannot meet the standard to permit early discovery. First, Plaintiffs cannot show they would be irreparably harmed without access to early discovery, because the materials requested are not necessary for Plaintiffs to support their Motion for a Preliminary Injunction. Indeed, Plaintiffs’ Motion for a Preliminary Injunction includes over 400 pages of argument and exhibits, including the relevant contracts in dispute and citations to over 100 public sources. And Plaintiffs have assured the Court that they already have the information they believe they need to demonstrate their claim “prior to having any access to expedited discovery.”
A hearing is scheduled for November 4, which is the earliest a judge could rule on these matters, but such a ruling could come after the hearing as well. The two teams wanted a hearing this week but NASCAR successfully argued for a delay to November to the impact of Hurricane Milton, which did damage to Daytona International Speedway across from NASCAR’s office in Daytona Beach, Florida.
