NASCAR wins key appeal in antitrust lawsuit filed by Michael Jordan's 23XI Racing, Front Row Motorsports
A three-judge federal appeals court has overturned a key ruling in the NASCAR antitrust case, dealing a significant blow to the race teams seeking to retain their status for this season.
Front Row Motorsports and 23XI Racing, the team co-owned by Michael Jordan and three-time Daytona 500 winner Denny Hamlin, had won a preliminary injunction from a U.S. District Court in December that allowed them to race as 'charter' teams in 2025 without being subjected to a clause that prevented them from suing NASCAR.
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But the U.S. Court of Appeals overturned that Thursday, ruling the lower court 'abused its discretion' with the preliminary injunction, clearing the way for NASCAR to strip three charters from each of the two race teams. The charters are valued in the tens of millions of dollars.
Charters are franchise-like licenses that allow race teams to have guaranteed entries into NASCAR Cup Series races and earn the accompanying higher payouts. Without charters, 23XI and Front Row would have to race as 'open' teams and risk failing to qualify for a race; open teams also get drastically less money from each race than charter teams.
The ruling follows a hearing last month in which the three judges expressed considerable skepticism over the grounds on which the preliminary injunction was granted, saying there was no similar precedent in more than 125 years of the Sherman Antitrust Act.
At issue was a release clause in NASCAR's 2025 charter agreements the teams claimed would prevent them from bringing antitrust action against NASCAR if they signed it. The lower court agreed with the teams that the clause was a monopolistic practice and allowed them to sign a version of the charter agreement that removed the release clause while the lawsuit was pending this season.
But the appeals court disagreed, ruling there were no previous cases that said requiring a release constituted an antitrust violation.
'Because we have found no support for the proposition that a business entity or person violates the antitrust laws by requiring a prospective participant to give a release for past conduct as a condition for doing business, we cannot conclude that the plaintiffs made a clear showing that they were likely to succeed on the merits of that theory,' the court said. 'And without satisfaction of the likelihood-of-success element, the plaintiffs were not entitled to a preliminary injunction.'
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During the May hearing, judges had warned the teams their claim came across as 'having your cake and eating it, too.' That's because the teams were suing over monopolistic practices while also asking the court to force NASCAR to allow them to participate.
'If you don't want the contract, you don't enter into it and you sue,' Judge Paul Niemeyer said at the time. 'Or if you want the contract, you enter into it, and you've given up past releases.'
It is not yet clear what will happen next in the immediate aftermath of Thursday's ruling. If NASCAR chooses to follow through by stripping the charters, the teams would lose approximately a combined quarter billion dollars in charter values in addition to the lower race winnings they will now receive.
The teams can still appeal this ruling, so it would not go into effect immediately.
Any team losing a charter is impactful considering the additional millions in lost revenue associated with owning a charter. Now, compound that by three — the number of charters each owned by 23XI Racing and Front Row Motorsports — and the magnitude of Thursday's ruling really is driven home. Both teams stand to lose a considerable amount of money, potentially to such a degree that it raises questions about how each team will be able to effectively operate going forward.
Yes, both ownership groups have the financial means to withstand the short-term hit as their federal lawsuit against NASCAR plays out in the courts (the trial is set to begin Dec. 1). And the teams could still appeal and win, which would make all this null and void. As it stands, though, this appears to be a body blow that could stunt their respective competitiveness over the remainder of the 2025 season.
From a bigger perspective as it relates to the ongoing lawsuit, should the teams appeal and lose, one has to wonder if Thursday's ruling influences 23XI and Front Row to reconsider pursuing their joint federal lawsuit. Or perhaps it emboldens them even more to continue forward, even in spite of the financial impact. — Jordan Bianchi, motorsports writer
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