Retired NBA Basketball Player Michael Jordan is known as one of the greatest players of all time, from his countless accolades to his hour long highlight tapes, Jordan did it all in his illustrious NBA career. Ever since retiring however, Jordan has found himself investing in the sports business. Jordan has taken ownership of the NBA team Charlotte Hornets, as well as having a stake in sports betting app DraftKings. Another one of Jordan’s investments is his NASCAR team, 23XI, as he became a part owner of the team in 2021. In 2024, Jordan was unhappy with the way that NASCAR had been treating its teams, thus he sued NASCAR and CEO of NASCAR, Jim France, filing an antitrust lawsuit against the company through evidence of monopolistic practices.
NASCAR, even before the lawsuit, had been on thin ice with its teams ever since the founding of the sport in 1948. Before 2016, NASCAR teams were never guaranteed entry into races or prize money. Teams had to individually look for sponsors which was unsustainable for owners unless they owned some portion of another business that would sponsor it. This led to NASCAR creating a charter system, where all teams will share revenue and business sponsors while all being guaranteed a spot in the Cup Series, the top racing series in NASCAR.
Although this deal sounded profitable for both sides, in reality it wasn’t. Teams were not generating a profit at all, including 2021 Daytona 500 winning team owner Bob Jenkins of Front Row Motorsports, stating in an Associated Press article that he has never profited from NASCAR, and in fact lost money during the championship year. NASCAR is also clearly seen to be gaining money compared to the teams, as they signed a new 7.7 billion dollar TV deal with companies like Amazon and NBC just last November. These angers have boiled over into Jordan’s case, in which he stated in his suit that “I love the sport of racing and the passion of our fans, but the way NASCAR is run today is unfair to teams, drivers, sponsors, and fans.”
Jordan is mainly suing over the fact that NASCAR is employing monopolistic practices for their own gain over the teams, stated by Jordan in the lawsuit that NASCAR “used anti-competitive practices to prevent fair competition in the sport.” Teams are forced to buy car parts from specific vendors that are considered “NASCAR approved.” NASCAR tracks are also owned by NASCAR, alongside a detail in the charter stating that NASCAR cars cannot be driven on other competitive racing tracks. This was coupled with the fact that many teams felt pressured to sign the new agreement charter like Richard Childress, the owner of Richard Childress Racing, who stated in an interview with The Athletic that “We didn’t have a choice to sign [the charters],” Childress said. “It was just, ‘You sign it or you lose your charters.’ I couldn’t take that gamble, period. And I know a lot of owners I talked to felt the same way.” The deadline in fact was “a take it or leave it, one-hour deadline offer on Sept. 6.” This was the basis for Jordan’s lawsuit, a continuous stream of negative profit, and being the puppet for the hand that is NASCAR.
So where does this case go from here? Jordan has hired Jeffrey Kessler, one of the top sports lawyers to file a preliminary injunction that would allow Jordan’s 23XI team to continue racing during the calendar year, yet still allow the antitrust lawsuit to continue. 23XI as a team has also not signed the new charter with an agreement that no team is allowed to file an antitrust lawsuit against France or NASCAR, meaning that Jordan will be able to have 23XI race until the end of his charter on December 31st, 2024.
Sources:
https://apnews.com/article/nascar-antitrust-lawsuit-jordan-bded312b0330122249824cbc059dabf5
https://www.cnbc.com/2024/10/02/michael-jordan-23xi-racing-team-sues-nascar-jim-france.html
https://www.inc.com/jeff-haden/nba-legend-michael-jordan-just-sued-nascar-the-sport-and-the-business-of-the-sport-will-never-be-the-same/90984670
https://www.nytimes.com/athletic/5820663/2024/10/05/nascar-michael-jordan-lawsuit-denny-hamlin-garage-reaction/
5 comments:
I'm skeptical of NASCAR's "charter" system, especially when you mention that revenue and sponsors are shared amongst teams, with the promise of entry into one of the top racing series in NASCAR. I understand that prior to this change, teams had to find their own sponsors--which wasn't even a guarantee--in order to have even the slightest change to participate in tournaments. However, this new system doesn't seem to be much better. Rather than fixing the root cause, it introduces more problems, like the issue of revenue distribution and other logistical nightmares. As for the allegations against NASCAR, there seems to be some truth about the monopolistic practices of the organization; it truly does not make sense that the company is signing billion dollar deals while being unprofitable overall. Only time will tell whether Jordan's call to escalate matters was the right call or not.
Covering a more niche topic like this was a super interesting read. It opened my eyes to a lesser known news story and the plight of these teams and the trust like system that NASCAR operates under. However, the prominence of large corporations that are near or nearing monopoly status isn't unheard of. For example, Amazon has a chokehold on the delivery and online shipping business hurting many physical POS and locations. I hope that the teams end up winning the anti-trust case as it will set a precedent of anti-trust practices and hopefully set up more protections for the consumer.
I agree with Rocco that there are a lot of other examples of other large corporations that are taking control of their entire field, but I also think a lot this bad business behavior gets ignored. Personally, I have never really payed attention to NASCAR as a sport, and I don't think many people are even aware that something like this was going on. But, going forward, I think there is the potential for this case to gain traction and possibly (and hopefully) win. Because it is someone as famous as Micheal Jordan coming forward and calling out the faults of the system, there is a better chance that people will pay attention and that this anti-trust case could be the first of many to appear in the following. years. .
NASCAR is a sport that will dissolve because of corporate greed. Unless they start to change themselves, we will witness the last years of their operations. The charter system is the main problem as it will fail because of how sponsors are used. Teams should be able to find their sponsors instead of signing a charter and getting assigned a sponsor. NASCAR already makes enough money signing deals for streaming their races which should be enough. Look at the MLS, they have a partnership with Apple TV but allow each team to have their sponsor for their benefit. This approach should benefit the teams instead of NASCAR getting a portion of the money.
I agree with Jiaqi I am doubtful of this new charter system because sharing revenue and sponsors seems odd. I mean I see how could it could be beneficial with NASCAR needing sponsors in order to participate but I feel like this system is not the way to resolve that issue. With shared revenue it brings up questions about who gets what or how much and that creates a lot of difficulties as well as corporations taking over. I agree with the Sou that the charter system will most likely collapse because it may be good in theory but will cause lots of problems ultimately. Overall I think there are better ways to deal with their sponsorship issue than this charter system because like Jordan said there does seem to be some monopolistic practices at hand.
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