RICHMOND, Va. — In a recent development that could significantly impact the landscape of NASCAR, a federal appellate panel comprising three judges is considering whether to revoke an existing injunction in favor of 23XI Racing and Front Row Motorsports. The injunction currently permits these teams—part-owned by basketball legend Michael Jordan and seasoned driver Denny Hamlin—to participate as chartered entities during the ongoing NASCAR season. These teams are embroiled in a legal battle against NASCAR, alleging violations of antitrust laws.
At Friday’s session, NASCAR’s legal representative, Chris Yates, argued that the injunction, originally issued by U.S. District Judge Kenneth Bell, unjustifiably compelled the series to maintain business relationships with unwilling partners. This situation, Yates asserted, adversely affects other teams by reducing their earnings.
Yates emphasized that the district court made a flawed decision by granting the injunction since the charter contracts include a “release” clause that prevents teams from initiating lawsuits. He maintained that these teams should not enjoy the charter benefits while simultaneously challenging the system itself.
Should the injunction be overturned, 23XI Racing and Front Row Motorsports could continue to compete but without the advantages attached to being chartered, such as assured weekly revenues. This would also necessitate qualifying for each Cup Series race, which only reserves four open spots weekly while both teams are fielding three cars this season.
During the 50-minute hearing in the U.S. Court of Appeals for the Fourth Circuit, Judges Steven Agee, Paul Niemeyer, and Stephanie Thacker raised objections to the arguments presented by the plaintiff’s attorney, Jeffrey Kessler. Kessler accused NASCAR of monopolistic behavior, claiming that overturning the injunction mid-season would be devastating to the teams by potentially causing loss of sponsorships and drivers.
The legal feud traces back to an antitrust lawsuit the teams filed on October 2 in North Carolina, accusing NASCAR of coercive practices in charter agreements that financially disadvantage the teams. Efforts to negotiate new charter agreements over a two-year span had been unsuccessful, and 23XI Racing along with Front Row Motorsports stood apart as the only ones among 15 charter holders refusing to sign new contracts last September.
These charters, first established before the 2016 season and twice extended, align with the current media rights deal expiring in 2031. They reserve 36 of the 40 weekly race spots for charter teams. The panel acknowledged Yates’s point that the lower court’s injunction mistake was primarily because it reversed the release condition while compelling the teams to sign NASCAR’s charter.
“It seems you want to have your cake and eat it, too,” Niemeyer remarked towards Kessler. At another moment, Niemeyer straightforwardly suggested that if the teams wanted to race, adopting the charter was necessary.
Yates further insisted that forcing NASCAR into a detrimental partnership with the two teams negatively impacts NASCAR and other teams by obstructing their financial gains. The teams, Yates argued, are unwillingly benefiting from a rejected contract.
Despite Kessler’s attempt to justify the injunction through alternative evidence, Niemeyer was unconvinced. “The court wanted you to be able to race but without a contract,” he said.
The case is set for trial in December. During the session, Judge Agee encouraged both parties to engage in mediation efforts as prescribed by a lower court to address the current dispute over the injunction. “It’ll be a very interesting trial,” Agee commented with a hint of anticipation.
Mediation prospects appear bleak, with Yates definitively stating to the judges, “We’re not going to rewrite the charter.”