Lack of trust breeds antitrust

By ZECH YODER

For more than 75 years, NASCAR has been run by a single family, the France family. This week, the France family’s iron grip on America’s most popular form of auto racing has been challenged for the first time in nearly 60 years.

On Wednesday, Oct, 2, NASCAR Cup Series teams 23XI Racing and Front Row Motorsports filed a lawsuit in a North Carolina Federal Court alleging that the Frances’ control over NASCAR and premier stock racing generally amounts to a monopoly. The antitrust lawsuit makes serious allegations against NASCAR and its control over the teams and the stock car racing industry.

The disagreement between NASCAR and 23XI Racing/Front Row Motorsports appears to have developed from the latest Charter Agreement between NASCAR and the Cup Series race teams. Prior to 2016, Cup Series teams were completely independent from NASCAR. Team earnings derived exclusively from sponsorship dollars and prize money from races. The First Charter Agreement, implemented in 2016, provided 36 charters for the 36 full-time cars in the Cup Series. Each charter was provided a yearly stipend from NASCAR (which varied depending on results) and guaranteed a starting stop in each race of the season.

Make no mistake, the First Charter Agreement was not a permanent franchise agreement like in the NFL or the MLB. NASCAR and the France family still had exclusive control over nearly every aspect of the sport.

For the last two years, NASCAR and the race teams have been working toward a new charter agreement as the First Charter Agreement was set to expire at the end of 2024. By all accounts, the negotiations were difficult and, at times, contentious. With the steady decrease in available sponsorship dollars, race teams have been asking for more money from NASCAR.

Jeff Gordon, a former driver turned executive for Hendrick Motorsports, suggested that Hendrick Motorsports, NASCAR’s most successful team, had not turned a profit in years. Though, last Fall, NASCAR landed a new TV deal worth nearly $8 billion.

Eventually, NASCAR made a final “take it or leave it” offer to the race teams and threatened to terminate the charter system altogether if it was not signed, a move that would bankrupt many of the Cup Series team. All but two teams signed the agreement, indicating that they had no choice. 23XI Racing and Front Row Motorsports were the holdouts. In the midst of potentially losing their charters, 23XI and Front Row filed the lawsuit.

The lawsuit centers around the France family’s control of NASCAR. Unlike the NFL or the MLB, which is controlled by the team owners, NASCAR is controlled by a single family. Race teams are viewed as independent contractors, lacking any decision-making power. 23XI and Front Row contend that NASCAR has developed its business in such a way as to corner the market on premier stock car racing thereby forcing the race teams to accept disparate terms. 23XI and Front Row point to NASCAR owning nearly half the tracks that it races on or requiring other track owners to sign non-compete agreements with NASCAR in order to host NASCAR events. 23XI and Front Row also point to NASCAR’s recent acquisition of the ARCA Menards Series, the only other national stock car series outside of NASCAR’s control.

The impact of this lawsuit is enormous. Particularly, because 23XI is co-owned by one of the most recognizable athletes ever, Michael Jordan. Michael Jordan is not used to being pushed around.

For the last 75 years, NASCAR had all the leverage and held all the cards. With this lawsuit, it feels that its grip on American stock car racing has loosened even if only by a little. This is uncharted territory. It would be a fool’s errand to try to predict what happens next or what impact this may have on the sport. Stay tuned because the next six months will be a roller coaster.

Zech Yoder is a local resident, an attorney at Adler Attorneys in Noblesville, and a lifelong race fan.