Sports Law | Business Law | Society

In a high-profile antitrust clash that has reverberated throughout the sports industry, NASCAR is facing off in federal court against 23XI Racing, the team co-owned by NBA legend Michael Jordan and veteran driver Denny Hamlin, along with Front Row Motorsports. At the heart of the lawsuit: whether NASCAR’s charter system unlawfully restricts competition and violates U.S. antitrust laws.

The Legal Foundation of the Dispute

The case was initiated in late 2024 when 23XI and Front Row Motorsports declined to sign NASCAR’s new team charter agreement, introduced as part of its restructuring for the 2025 season. The plaintiffs argue that:

• NASCAR wields monopolistic control over premier-level stock car racing.
• The charter system operates as an exclusionary practice, restricting participation and revenue access.
• Teams were pressured to waive legal claims (including potential antitrust actions) in order to retain their charter status.

In response, NASCAR maintains that the charter system is a pro-competitive and stabilizing framework, critical to maintaining the sport’s business model. It insists that teams unwilling to enter into this voluntary agreement cannot claim entitlement to its benefits.

Key Developments in Litigation

• December 2024: U.S. District Judge Kenneth D. Bell initially sided with NASCAR, denying a preliminary injunction.
• Later that month, Judge Bell reversed course, granting a preliminary injunction that allowed 23XI and Front Row to retain their charter status for the 2025 season. This was due, in part, to evidence showing potential harm to driver contracts and sponsor negotiations.
• June 2025: The Fourth Circuit Court of Appeals vacated the injunction, concluding that the plaintiffs failed to demonstrate a likelihood of success on the merits.

Notably, the appellate court’s opinion emphasized that the charter system—though arguably restrictive—is not clearly unlawful under prevailing antitrust standards without further factual development.

Legal Issues at Stake

This litigation implicates several core antitrust principles, including:

• Monopolization (Sherman Act §2): Whether NASCAR exercises monopoly power in a relevant market, and if its charter system constitutes anti-competitive conduct.
• Group Boycotts/Concerted Refusals to Deal (Sherman Act §1): Whether the coordinated implementation of the charter system improperly excludes non-participating competitors.
• Coercive Contracting: Whether conditioning participation on waiver of legal remedies is an abuse of bargaining power in a concentrated market.

The plaintiffs also challenge the charter structure as a barrier to market entry, arguing it creates an artificial scarcity of race opportunities and entrenches incumbent teams.

Industry Implications

If 23XI and Front Row ultimately prevail, the ruling could reshape the commercial and regulatory structure of NASCAR and serve as a precedent for antitrust challenges in other professional sports. A court-imposed alteration or dismantling of the charter system could:

• Open the door for new entrants to compete without restrictive agreements.
• Alter how broadcast and sponsorship revenue is distributed across teams.
• Compel sports leagues to reexamine governance models that prioritize legacy franchises at the expense of competitive equity.

Even in defeat, the plaintiffs have already triggered heightened scrutiny of NASCAR’s internal governance and revenue-sharing models.

Conclusion

The NASCAR v. 23XI Racing litigation is a rare and potent intersection of antitrust law and sports governance. With major implications for how professional leagues structure competition and control access to economic rights, the case may become a bellwether for future legal challenges in tightly regulated sports ecosystems.

Legal observers will be closely watching the court’s next moves as the case proceeds through discovery and toward a potentially precedent-setting trial.