Explaining the 23XI/Front Row Motorsports Lawsuit Against Big NASCAR

The France family—most notably chairman Jim France, 79, and his executive-vice chair, niece Lesa France Kennedy, 63—has been running the sport that they largely own, NASCAR, as a “personal fee stub and piggy bank,” said Jeffery Kessler, lead attorney for an antitrust suit against NASCAR filed by two of the sport’s teams, 23XI Racing and Front Row Motorsports.

The suit seeks to break the monopoly hold that NASCAR has over big-time stock car racing, Kessler said. Big NASCAR, let’s call it.

Attorney Kessler is a heavyweight in this arena, if he does say so himself. As co-executive chairman of the law firm Winston & Strawn, he is “one of the world’s leading antitrust, sports law, and trial lawyers,” his personal biography states. He played a major role in suits that resulted in permission for college athletes to be paid, and he is credited with paving the way for the NFL’s unrestricted free agent policy, largely resulting from a 1992 lawsuit he filed. “He has served as lead counsel in some of the most complex antitrust, sports, and intellectual property litigations in the country.”

And this will prove to be complex. The suit against NASCAR is being filed on behalf of two NASCAR Cup teams, 23XI Racing, which fields Toyota cars for drivers Bubba Wallace and Tyler Reddick, and Front Row Motorsports, which backs Ford drivers David Gilliland and Michael McDowell. None of the other major multi-car teams have signed on.

The 23XI team is co-owned by NBA legend Michael Jordan and NASCAR driver Denny Hamlin, whose personal ride is with the Toyota team of Joe Gibbs Racing. Front Row is backed by Bob Jenkins, who made his fortune in fast food restaurants. Both teams intend to expand to three cars.

In a joint statement issued by both teams, they explained their motivation to go to court: “NASCAR and the France family operate without transparency, have stifled competition, and control the sport of stock car racing in ways that unfairly benefit them at the expense of team owners, drivers, sponsors, partners, and fans, through the following anti-competitive practices:

• Buying a majority of the premier racetracks that are exclusive to NASCAR races;
• Imposing exclusivity deals on NASCAR-sanctioned racetracks;
• Acquiring Automobile Racing Club of America (ARCA), the only notable stock car racing series competitor;
• Preventing teams from participating in any other stock car races, while also retaining ownership over Next Gen parts and cars; and
• Forcing teams to buy their parts from single-source suppliers chosen by NASCAR.

“No other major professional sport in North America is run by a single family that enriches themselves through these kinds of unchecked monopolistic practices.”

“There has never been a case that I have found that is as egregiously anti-competitive as this one,” Kessler said. “Here we have a sport where one family has basically used its power to create an absolute monopoly for the benefit of that family as opposed to being for the benefit of the teams, the drivers, the sponsors, the broadcasters and the fans.”

There are some obvious soft spots in the arguments. No one in the industry would consider the ARCA series to be a “notable competitor” to NASCAR, for example. Nor does NASCAR own its participating cars.

Front Row and 23XI were the only two teams to decline to sign a new charter arrangement that runs from the 2025 season to 2031. The charter system allows teams to field one car per charter, in return for a guaranteed starting spot and a share of a preferred purse. That’s especially valuable in the search for backing—attorney Kessler said in his press conference that it costs $18 million a year to field a competitive car for a season in NASCAR Cup—as charter teams can assure sponsors that they will be in every race, and consequently on every TV broadcast.

Charter prices fluctuate but have been about $30 million this year. IndyCar recently announced that it will pursue a system similar to the NASCAR charter arrangement.

Unless the suit prevails, both 23XI and Front Row are expected to buy a charter from Stewart-Haas Racing, which is leaving NASCAR at the end of 2024. Included in the teams’ statement: “In the coming days, we will file a preliminary injunction to enable our teams to race in the next calendar year under the 2025 charter agreement, while continuing to pursue our antitrust litigation. The filing will seek discovery from both NASCAR and Jim France related to their exclusionary practices and intent to insulate themselves from any competition. 23XI Racing and Front Row Motorsports will seek treble damages for the anti-competitive terms that teams have been subject to under the 2016 charter agreement.”

Hamlin, Jordan, and Jenkins were all quoted in the joint statement. Said Hamlin: “It’s actually pretty simple in my opinion. When I look around, I see that the best and most competitive sports in the world understand that when teams thrive, fans benefit, and that everyone who invests in making the sport a success should share fairly in that success. With the right changes, we can certainly make that a reality in racing.”

Said Jordan: “Everyone knows that I have always been a fierce competitor, and that will to win is what drives me and the entire 23XI team each and every week out on the track. I love the sport of racing and the passion of our fans, but the way NASCAR is run today is unfair to teams, drivers, sponsors, and fans. Today’s action shows I’m willing to fight for a competitive market where everyone wins.”

And Jenkins: “I have been part of this racing community for 20 years and couldn’t be more proud of the Front Row Motorsports team and our success. But the time has come for change. We need a more competitive and fair system where teams, drivers, and sponsors can be rewarded for our collective investment by building long-term enterprise value, just like every other successful professional sports league.”

As of this writing, neither NASCAR nor the court has issued a statement regarding the lawsuit. It is unlikely the suit will affect the rest of the 2024 Cup season, which has six more races to go.