CHARLOTTE, N.C. (CN) — Michael Jordan’s NASCAR team was in federal court in Charlotte, North Carolina, Monday afternoon, as two racing teams argued they should be allowed to compete in February despite their legal challenge against the American auto racing company.
23XI Racing, a team partially owned by basketball legend Michael Jordan, and Front Row Motorsports sued NASCAR in October, claiming that it has a monopoly on the industry and is forcing teams to sign anticompetitive contracts to compete.
The racing teams sought a preliminary injunction forcing NASCAR to offer them the same member agreement they failed to sign when offered a take-it-or-leave-it deadline in August. The teams didn’t sign the new racing agreement when it was first on the table, they said in their complaint, because signing the agreement would have barred them from suing NASCAR.
Not signing a new agreement would mean being unable to particpate, which risks the teams losing their sponsors, drivers, and competitive opportunities, plaintiffs argued, resulting in tens of millions of dollars in lost revenue.
In court Monday, Jeffrey Kessler, an attorney representing the teams, argued that the court needs to grant a preliminary injunction to allow the teams to race. Requiring NASCAR to offer them a new charter or an open racing agreement would allow them to compete, which is necessary for the teams to survive, Kessler said, while it would be no hardship on NASCAR to allow the teams to participate.
“If we do not have charters, our drivers are free to leave. If we do not have our charter, our sponsors are free to abandon us,” said Kessler.
NASCAR was represented by Christopher Yates, who argued that the court can’t force NASCAR’s hand and require it to allow the teams to play in its competitions.
“NASCAR only wants to enter into charter contract with teams who want to further the sport,” Yates said, claiming that a new contract could last seven to 14 years.
Kessler contended that they’re seeking a temporary contract to allow the teams to compete until the suit is resolved.
In their suit, the plaintiffs said NASCAR violated the Sherman Act by monopolizing the stock car racing industry and restraining competition, pointing towards NASCAR’s purchase of its closest competitor, the Automobile Racing Club of America, in 2020.
“There’s no dispute that NASCAR is the only top tier stock car racing company in the country,” said Kessler.
NASCAR also owns premier tracks across the U.S. that are only used for its races, and requires exclusivity from tracks they work with, which would make it difficult for a budding competitor to access high level race tracks, plaintiffs say.
NASCAR’s agreements ban teams from competing in any other car racing competitions, and requires teams that participate in its Cup Series to buy cars that NASCAR maintains control over. These cars can’t be driven in any other race, and teams have to buy parts from NASCAR’s suppliers, which costs upwards of $3 million for each team every year.
Their control over race tracks alone should qualify NASCAR as a monopoly, Kessler said.
NASCAR isn’t a monopsony or monopoly, Yates said, because the 2025 agreement that all other teams signed increased the amount of profit-sharing, with teams receiving nearly half of broadcast revenue. Teams have bargaining power, as NASCAR made compromises in the new agreement, and most team owners are happy with the new charters, he said.
“There’s plenty of opportunities for other people to come in and create competing stock car racing companies,” said Yates.
Racing teams last signed agreements in 2016, which expire at the end of the year, and all other teams signed the renewed 2025 charter. Teams that didn’t sign and want to compete would be forced to become open teams, and only receive scholarships and prize money, but be excluded from merchandising and broadcasting profits.
Charters are good for racing teams, Yates said. Charter agreements give stock car racing teams guaranteed income and entry into races. Teams have been pushing for permanent charters to grant them what would essentially be franchise status in the sport.
Other sports organizations, including the NFL and NBA, split television revenue equally between all leagues. The plaintiffs have claimed that racing teams would be able to navigate more profitable contracts if NASCAR had competition.
NASCAR is owned by the France family, unlike the NFL and NBA, which are operated and owned by the leagues. The family’s control over the industry gives them unfair negotiating power, plaintiffs argue, and teams see the majority of their profits go back to NASCAR.
The entire charter isn’t what the teams take issue with, Kessler said, only specific provisions, including that NASCAR can’t be sued for future actions.
The teams are hoping the court will grant them a release from a section in the new charter agreement releasing NASCAR from liability, and will compel NASCAR to allow them to compete.
Yates said that the teams won’t suffer any irreparable harm by being unable to compete, and that there is no pressing deadline the court needs to consider.
“You can’t claim the benefits of a contract while at the same time saying it’s anti-competitive,” Yates said. “Any injury these plaintiffs may claim from not signing the charters is entirely self inflicted.”
After the hearing, Yates declined to comment, and Kessler said he felt the hearing went well.
Jordan, who joined his attorneys in court, agreed.
“I think we did a good job today, and I’m looking forward to winning the championship,” he said.
U.S. District Judge Frank Whitney said he planned to issue a decision by the end of the week.