The biggest name in one sport is attempting to take down NASCAR in a true Goliath versus Goliath battle that will be settled in the courtroom.
Michael Jordan (yes, that Michael Jordan) is part of a group who has filed an antitrust case against NASCAR, claiming that the sports charter system is unfair and NASCAR is acting like a monopoly. The lawsuit, filed by 23XI (co-owned by Jordan and driver/owner Denny Hamlin) and Front Row Motorsports (owned by Bob Jenkins), argues that NASCAR essentially forces teams to operate under a broken charter system.
What Is The Charter System?
The charter system is a little like franchise ownership in other sports. Signing a charter agreement guarantees the chartered teams entry into 38 NASCAR events, a share of media/TV revenue and certain financial guarantees. However, Jordan and crew also argue that the charter significantly restricts their freedom by not allowing them to enter non-NASCAR sanctioned events, forcing teams to purchase parts from specific NASCAR-approved suppliers and limiting free market competition. NASCAR proposed a new charter agreement in late 2024 and gave the team only hours to agree to the terms. Most teams complied, but the two teams involved in the antitrust lawsuit did not.
The formal trial began earlier this month, and while many hoped that the trial would be wrapped up in two weeks, the judge overseeing the case recently lambasted both sides for their slow pace and their refusal to answer rudimentary questions.
What’s At Stake?
If Jordan and crew win, it might force NASCAR to restructure its business model, forcing it to move to a more open model, increase revenue sharing or grant permanent charters to teams. If NASCAR wins, Jordan and Jenkins may have to either agree to the charter system or race unchartered, without many of the protections and guarantees offered to teams who sign the agreement.
NASCAR, in their defense, argues that teams are free to sign or forgo charter agreements as they please, noting that they have upheld their obligations and guarantees under the current model. They say it’s simply business, and they are holding up their end of the bargain. But will a jury agree?
Financial Ramifications Of Ruling
Both sides have been imploring a judge to consider the financial ramifications of any decision. Team owners say the guaranteed money isn’t close to covering operating costs, and the forced buying from specific NASCAR suppliers only adds to their costs. They want more financial protections and guarantees from a business they they say can be financially crippling.
NASCAR has argued that they have taken significant losses over the years in hopes of expanding the sport and working to increase revenue which would then be passed on to the charter teams. They said they lost $55 million over three years when it held races in downtown Chicago and lost $6 million when it had a June race in Mexico City. They argue these were strategic investments to grow fans and secure Amazon as a broadcast partner, and it’s not always what is paid out directly to teams that matters when it comes to the financial side of things.
While it’s uncertain when this case may wrap up, there is hope that a ruling is made before Christmas, although Jordan’s side continues to say that they are open to a settlement (albeit any settlement offer would like be north of a quarter of a billion dollars, so many feel that a settlement at this point is unlikely). We’ll keep tabs on the case as it plays out and provide an update in the event of a resolution.
