The Lawsuit Against NASCAR Is Flawed and, As You’d Expect, All About Money
In this corner: Beloved NBA legend Michael Jordan, and NASCAR driver Denny Hamlin.
In that corner: NASCAR chairman and CEO Jim France, 79-year-old (and turning 80 in two weeks) son of “Big Bill” France, the founder of NASCAR.
The lawsuit: Over money. Ain’t it always?
In an admittedly oversimplified nutshell: Jordan and Hamlin co-own 23XI Racing, along with investor Curtis Polk, which fields Toyota NASCAR Cup cars for Bubba Wallace and Tyler Reddick. (Hamlin still drives for Joe Gibbs Racing.) 23XI, along with Front Row Motorsports (Ford drivers are Michael McDowell, in his last season for the team, and David Gilliland), are suing NASCAR and Jim France in part over their dissatisfaction with the NASCAR charter system. NASCAR has asked teams to sign on for seven more years of the charter system, and all did, except for 23XI and Front Row. The two teams also want to expose, and presumably overturn, what they perceive to be an illegal monopoly in how NASCAR is run.
The suit accuses NASCAR of having “unlawfully exercised [monopoly] power in the market for premier stock car racing teams in the United States,” in violation of the Sherman Antitrust Act.
NASCAR, the suit says, is using that monopoly power “to exclude competition and injure plaintiffs and other stock car racing teams by forcing them to simultaneously accept anticompetitive contract terms.” The suit asks for an injunction against NASCAR. If granted by the court, 23IX and Front Row would be allowed to get charters, apparently without having to sign NASCAR’s required agreement. Refusal of an injunction would cost the plaintiffs “tens of millions of dollars per year, which threatens the very existence of their businesses.”
In an even smaller nutshell, the charter system was created largely in response to team owners complaining that, after decades of participation in NASCAR, their teams only had value in the sense that they had cars and parts and facilities they could sell. In other sports—and you’ll be reading “in other sports” a lot as this lawsuit moves forward—the owner of, say, the Kansas City Chiefs could sell the team for far, far more than the face value of the players and a stadium.
NASCAR owners wanted something like that to sell, too. So in 2016, NASCAR created the charter system. It worked like this: NASCAR would offer 36 charters to the existing teams, representing one car per charter. Owning a charter would mean that the car would be guaranteed a starting spot in every race, without having to qualify. That meant that the team owner could sell sponsorship with guaranteed exposure on track for every race. It also meant that the car would earn the maximum share of the purse, depending on finishing position.
It would be good for TV ratings and attendance, since fan favorites like Jimmie Johnson and Dale Earnhardt, Jr. would never be in danger of not qualifying, and being parked for a race. Dale Jr. fans could buy a ticket and know for sure they’d see him race.
Since NASCAR races are capped at 40 starting positions, the charter system left four “open” spots that non-chartered teams could try to qualify for. Those positions have most often been filled by lower-budget or part-time teams, based on their qualifying speed. Seldom, though, do more than 40 cars show up for a race nowadays, so everybody who wants to race, does.
The charters, which reportedly sold for several million originally, would, NASCAR figured, go up in value on the open market. They have, by roughly tenfold or more. If a team owner holds two charters (each owner is allowed a maximum of four) and wants to sell one, the owner takes offers from buyers, and typically accepts the highest one.
Thus solved, at least to NASCAR’s thinking, the problem that team owners complained about—wanting more to sell than just the store and its employees. A few weeks ago, IndyCar adopted essentially the same system.
Including an extension granted in 2020, the charters granted by the original agreement with NASCAR run through 2024. Recently, the series had the team owners sign up for a new agreement to secure charters that would last another seven years. There were multiple details in the new charter agreement that team owners didn’t like: They wanted the agreement to be permanent, first off, rather than a seven-year agreement. They also didn’t like the fact that NASCAR would be able to buy back charters if it wanted to, presumably allowing the sanctioning body to field cars itself, though that idea seems far-fetched. Team owners grumbled but signed what was termed NASCAR’s “final offer.” Only 23XI and Front Row balked.
And that’s how the NASCAR charter system works—or doesn’t work, if you’re 23XI and Front Row. (I know it’s complicated: KickintheTires.net and Sportsnaut.com have posted good information on the suit.) Both 23XI and Front Row have indicated that, if they have to, they might run as “open,” non-chartered teams next year. Which could leave six charters all of a sudden unspoken for: Presumably, if they aren’t sold, there would be 10 starting spots instead of four available to open, non-chartered teams. Of course, that could change. It’s still NASCAR’s world, and the teams are just living in it.
Here’s my analysis, for what it’s worth: The argument the lawsuit presents, as mentioned, leans heavily on what other sports do. Let’s establish that NASCAR is not “other sports,” and never will be: It is simply that much different from basketball, baseball, football, soccer—pick one.
In his last year playing for the Chicago Bulls, Michael Jordan was paid $33,000,000 in 1997 dollars. That kind of money simply doesn’t exist in NASCAR, especially in this tough sponsorship environment. And in 2016, NASCAR quit reporting how much drivers earn in purse money, and it wasn’t because the purses were going up. (NASCAR’s explanation for ending its 60-year tradition of publishing race winnings was because the practice wasn’t “contemporary,” given the new charter system.)
Here’s why the lawsuit is flawed:
• In its 76-year history, NASCAR has made hundreds, maybe thousands, of participants rich. Not Michael Jordan rich, but inflation-adjusted millionaires, anyway. If you don’t feel you are getting compensated fairly, quit. Participation in stock car racing is strictly voluntary.
• It is hard to argue that the current France-family leadership team—Jim as CEO and chairman, niece Lesa France Kennedy as executive vice chair of NASCAR, and her son Ben Kennedy, NASCAR’s executive vice president—haven’t delivered. They’ve moved quickly to solve problems when they arise; they have invested in the sport; they have surrounded themselves with competent executives such as NASCAR president Steve Phelps and NASCAR chairperson Mike Helton; the venues owned by NASCAR lack for nothing; Jim France has overseen IMSA sports car racing, and it’s better than ever; he has propped up the NASCAR Craftsman truck series and the recently acquired ARCA feeder series in the interests of competition and developing future talent. The forward-looking 2025–2031 NASCAR broadcast contract will bring in more than $1 billion per year. Finally, no future star has participated in NASCAR and then migrated to a different sanctioning body in years.
• Why haven’t they? Money—and there’s still a lot available, one reason being that NASCAR has a 33-race schedule, far more than other major U.S.-based series. According to the original 157-page court filing, Front Row owner Bob Jenkins said that despite being in existence for 20 years, Front Row, which currently has 80 employees, has never made a profit. Why does he keep coming back? If he has been running the team out of his pocket for 20 years, NASCAR is more of a sport than a business to him.
• If 23IX and Front Row want to create and back a competing series, they should do it. If not, play by the rules you signed up for. If the teams’ revenue is indeed “tens of millions of dollars per year,” it will be difficult to argue that NASCAR participation resulted in poverty conditions.
• Central in the lawsuit filing is a request to essentially open NASCAR’s books to the public. Fine, if it was a public company; but it’s a private company, and as such doesn’t have to make its finances public. There have been suggestions that this threat could result in NASCAR writing a massive go-away check to 23XI and Front Row. Those making that suggestion don’t know Jim France.
The France family built NASCAR. Let them keep operating it as they see fit. If you don’t like it, take your ball and find another playground.
No doubt it’s all about money, MJ’s involvement is strictly to leverage his name and brand power into a money making venture. I’m curious to see if the courts agree to anything in the suit. My guess is MJ and company are upset they will make less money and seeing if they can try to maintain whatever they were making before. I just don’t know how they are going to get what they want in this case.
NASCAR is a company owned by the France family.
As for those who participate in the races are at will employees. It is up to them if they want to race or not. The events are provided and it is of their free will if they race and how often they race.
As to how big the teams are and how much you spend that is on you.
The series started out as a non profit sport and grew into a monster.
NASCAR always operated best when Bill SR and Jr were there as they were benevolent dictators. They knew it was racing but they also knew it was entertainment. No one was going to stink up their show, No One. Even Dale Sr was warned not to over step as they could make it with out him if they had to. Cutis Turner found out the hard way.
To those who invested in NASCAR to make a profit sorry you chose the wrong sport.
You can own what someone else owns already.
If you don’t like it quite. There are other teams and drivers willing to try to get in.
NASCAR needs to scale back. Stop trying to out do F1 or the NFL. You are not going to top them. Get back to real racing no stages and playoffs.
Focus on the south and mid west where your base is.
Get back to cheaper and more simple cars. I am tired of cars going out just because they brushed the wall and broke a rear axle. I used to love seeing JR Johnsons team or Dale Earnhardt’s crew change an engine or cam to get get back in for points.
They need to get back to the roots.
Also we need to get the best drivers not the ones that look right and say the right things. The David Pearson’s and others who were not media savy were some of the greatest drivers that would be turned away today.
Same with others like Cale and more.
The fact is people are not going to pay more for these races. I stopped going do to cost and other BS going on. Lower the cost, keep it simple and keep the racing fun.
I would be in favor of no testing and practice. Lets see just who can drive a car and ask for the right adjustments.
Lets get the real entertainment back and get the best drivers we can find. Lets get the smaller teams competitive by holding down costs.
MJ if you want to make money bet on Basketball. Oh sorry that got you in trouble and in Minor league baseball.
“take your ball and find another playground”
The France family owns 20 tracks, from Talladega to Daytona and Bristol. Do you believe they would let another entity compete in stock car racing on their circuits?
If the answer is no, of course not, then that is potentially anti-competitive behavior. Anti-competitive behavior is illegal in the United States of America, land of the free, home lf the brave, and the homestead of the American Dream, based on free enterprise.
Jordan is on the correct angle here, fighting against an oligarchy lf rent-seekers.
Well written.
Look they built the tracks so they are their property not public domain.
There are other tracks they could run as a secondary series but like the indy split with Cart Car could not live without their prime event the 500.
IRL won at a cost. The reason Tony started the IRL as he did not want CART charging him to appear at the 500. It was an event that if you want to run enter if not that is up to you.
This will just hurt the series and cost fans more money MJ and Hamforbrains will lose and end up on the outside.
Bruton Smith was in a power struggle for years. He tried to do it with his own track and was looking to do his own series for nearly 30 years. It never worked.
If one was to look at the history of racing the series that last are those who had a strong leadership and ownership. They were more dictatorships.
They understood what it takes to keep a series alive and the fans and MFGs involved.
The Series that were run with weak leadership or the understanding of rules dies like Trans Am and Can Am. Even IMSA died and came back like the others with a firmer grip on their series.
It takes a strong leader and voice to keep everyone in their place and to keep the bills paid.
Smith did his power move when NASCAR was at the top of its game. Today the stands are not full and even some have been removed. Ratings are down and they do not disclose attendance anymore.
This will be just another case where no one wins.
I was waiting to find a comment about this. The author totally forgot to mention the fact that Nascar owns half the tracks, controls where the teams can buy parts, etc and not just in charge of how much media money is shared with the teams
You say “forgot” as though it wasn’t done on purpose. If anything, this article further reinforces the grievances by the plaintiffs. It could be summed up as “It’s the France’s ball field, either follow their rules or find your own field.”
When you think of it, it’s kind of wild to see a journalist toe the company line like this rather than actually, you know, do some journalism.
You say “forgot” as though it wasn’t done on purpose. If anything, this article further reinforces the grievances by the plaintiffs. It could be summed up as “It’s the France’s ball field, either follow their rules or find your own field.”
When you think of it, it’s kind of wild to see a journalist toe the company line like this rather than actually, you know, do some journalism.
I hope this goes the way the PGA Tour and LIV Golf went. In this scenario the PGA Tour is NASCAR and LIV Golf is MJ. It would be amazing for popcorn sales and media coverage!
Oh it’s EASY to argue the France family didn’t deliver. They were short parts on the next gen car, it wasn’t sufficient on rear impacts, for some reason it has a 5 speed and diffuser which hurt all but 1.5 mile tracks.
And this is BEFORE you note driver salaries are down while costs are up and nascar revenue is up.
Nascar jacks up costs with single source suppliers and holds down revenue by competing for sponsorships.
I will await your retraction when the court system sides with the lawyer that already beat the nfl, ncaa and us soccer.
I don’t understand why anyone would be rooting against this suit, unless their last name is France or Kennedy. If they really are keeping most of the pie, how would forcing them to share it be a bad thing? Of course it’s “about money,”. That’s money that can be spent on crew salaries, driver salaries, and so on. And frankly, I hope the France family is hording money; the sport could be seven hells of a lot better than it is, with less iron fist control from the founding family, who let’s all admit aren’t Big Bill.
Andrew, you obviously have not watched LIV golf, the crowds are like watching the final hole at the British Open, plus you get to watch great golfers and great golf, the PGA tour had to open up to a bunch of rookies to play for them, you don’t have any star status players on the PGA, maybe Patrick Cantlay because I like his game but if NASCAR teams don’t like their play ground go to another and stop whining.
Speaking of lawsuits, I’m surprised some slick haired ambulance chaser hasn’t sued NASCAR for false advertising since the cars are not stock. (Unless you’ve seen a 500 hp RWD Camry with no doors and decal headlights).
Get a single mom raising a cute, but ill, kid go on TV and say…”Little Timmy was crushed to learn he can’t by a car like his hero drives. He’s been saving his allowance for years. He’s disappointed, the doctors day this has set back his recovery by years.”
Watch a check, with a confidentiality agreement, come in the mail.
Bound to happen someday
I’m your average fan… I see nothing out of this that would be beneficial. Someway they need to have more manufactors involved. why does the “BIG THREE” have a iron grip on this? MONEY MONEY MONEY! I wonder what Dale Sr. would say about this? I am a all about history of the sport, there are lessons to be learned there.
Pay heed or we the fan may lose it all!
It’s because NASCAR isn’t road relevant and there’s little marketing involved. It’s an over-glorified spec series and has been for some time. Give it a decade of continued decline and it will be like Indycar: the most prominent club racing in the country with a side of B2B marketing.
I applaud Jordon for standing up to the France family. The topic here is covered in typical media fashion. A lawsuit stating flawed in the heading is one sided. With the amount of money needed to run a team using only France approved suppliers etc. They own the tracks too. Sounds a lot like ticket master. Because France is private means they can do what they want. It’s time to step aside. Nascar is dead anyway.
Certainly they can they can take their ball and find another playground. But where will they find a playground as big. That is exactly what the Sherman anti trust act was written to control. As mentioned in this thread. The Frances own the league and the majority of the tracks. They can control the sport.
Interesting that the parts of the country (South & Mid West) that like NASCAR are the parts that like autocrats.
Obviously the author is not a NASCAR fan or he wouldn’t be taking their side. The new car is a disaster and there is favoritism to some owners and teams. I also agree there is nothing stock on these cars anymore. I have been a fan since the old Wide World of Sports days. These new cars being a one source for parts leaves the door open for certain teams to get better parts than others at NASCAR’s direction.
Benny Parson’s ( miss him) was asked on a broadcast in the mid-’90’s before a race what is “stock” on these cars. He answered, “Nothing. Except the roof panel.” A race car in any series is not what’s on a dealer’s showroom floor of course, but calling these rolling tanks “stock cars” is….well, James, you are right.
I think we’ve all lost track of the big picture here and can’t see the forest through the trees. In short. Nascar said – ‘It’s our way or the highway’ – 23XI and Front Row said – ‘ Oh yea..we’ll see about that. See you in court.’ – Both are trying to exert their influence for their best interests using whatever resources at their disposal. If it was as black and white as many believe this conversation wouldn’t be taking place. Kind of a game of who’ll blink first. Ten will get you twenty that they will reach – ‘What we think.. is a fair and equitable solution’ (or words to that effect ) – just in time for press day before Daytona. As far as what is right and what is wrong in the current state of Nascar is pure speculation and beside the point when it comes to this in particular. I’d like to see them road race and run the infield like The 24 Hours instead of the – Throw your number in the hat… and the Daytona 500 winner is…but financially that would be corporate suicide.
If you don’t like the rules don’t get in the race. NASCAR has been around along time. I (and many other long time fans) would prefer the original points system. It made for better racing and a lot more fan interest and race attendance. Everybody should have a chance to be the champion.