Why Is Michael Jordan Suing NASCAR?
- Teams accuse NASCAR of controlling too much of the sport, lacking transparency, and placing financial burden on stakeholders.
- Hamlin testified about 23XI's rising costs and risks, arguing the current system threatens teams' financial stability.
- Potential outcomes include damages, restructuring NASCAR's charter system, or even forcing a sale of the organization.
A major lawsuit filed in October 2024 by 23XI Racing — owned by Michael Jordan, Denny Hamlin, and Jordan’s longtime business partner Curtis Polk — has officially gone to trial, according to reporting from AP News, ESPN, USA TODAY, and Sports Illustrated. Front Row Motorsports is fighting alongside the team, and together they are challenging what they say are unfair financial terms and an imbalanced system that harms NASCAR Cup Series organizations.
Over the next two weeks, a jury in Charlotte, North Carolina, will decide whether NASCAR has used its power illegally through its current charter structure, which the teams argue threatens their financial stability.
What is the lawsuit filed by Michael Jordan, Denny Hamlin, Curtis Polk, and Front Row Motorsports about?
The lawsuit was filed by 23XI Racing and Front Row Motorsports after they became the only two Cup teams to refuse to sign new charter agreements in late 2024. AP News noted that all 15 teams had spent more than two years negotiating for better financial and governance terms, but the final proposal fell short of what 23XI Racing and Front Row Motorsports were seeking. The plaintiffs accuse NASCAR of operating as a monopoly, claiming the organization controls too much of the sport, from track ownership and scheduling to rules and exclusive clauses that restrict teams from pursuing antitrust action. They also argue that NASCAR’s system lacks transparency and places too much financial burden on teams, drivers, sponsors, and fans.
The dispute intensified in late 2024. The teams first asked a judge to allow them to race in 2025 without signing the new charter deal, but were denied on Nov. 8 of last year, USA TODAY reported. They filed a second request later that month, warning that without court protection, they could lose drivers, sponsors, and the opportunity to acquire a third charter. NASCAR responded on Dec. 2, 2024, by asking the court to dismiss the lawsuit, arguing it was not a monopoly.
But on Dec. 18, 2024, Judge Bell granted the teams’ second injunction, allowing them to race with their current charters in 2025 and ruling that NASCAR does indeed hold monopoly power in stock-car racing. Now, it’s time for the two sides to hash things out in court.
Denny Hamlin took to the stand for the first two days of the trial.
Denny Hamlin delivered an emotional testimony on Dec. 1, the first day of the trial, as he described the sacrifices behind his 20-year NASCAR career and the increasing financial strain on modern teams. The charter agreements at the center of the lawsuit guarantee teams $12.5 million per car each year, up from $9 million under the previous deal. But Hamlin pointed out that 11 of the first 19 chartered teams have already gone out of business, highlighting ongoing financial strain, AP News noted.
Hamlin also detailed how 23XI acquired its three charters from teams that shut down, paying $4.7 million for the first, $13.5 million for the second, and $28 million for the third late last year. He admitted the third purchase was risky given the ongoing lawsuit — and the high price — but said it was necessary for 23XI to continue growing into a top-tier team.
Court documents obtained by ESPN and released Monday provided a detailed look at 23XI Racing’s finances through 2024. From 2021 to 2024, the team’s revenue grew significantly—from $27.8 million to $62.2 million, driven in part by an increase in NASCAR payments, which rose from $6.6 million to $21.1 million. Despite this growth, the team’s net income peaked at $3.5 million in 2023 before dropping to a $2.1 million loss in 2024. Sponsorship remains the team’s largest revenue source, totaling $39.6 million in 2024.
During his testimony on Dec. 2, Hamlin went into detail about the expenses listed in 23XI Racing’s budget. He explained that more than $703,000 was spent three years ago on various NASCAR-related costs, including entry fees, team credentials, and even access to internet signals at the track, according to AP News. Hamlin also highlighted the financial pressure on the ownership group, saying he and Michael Jordan spent $100 million to build 23XI, and that “all it takes is one sponsor to go away and all our profit is gone.”
According to the entrepreneur, it costs roughly $20 million per year to field just one car across all 38 races, not including overhead expenses such as driver salaries.
As for why he refused to sign last year’s charter agreement, Hamlin told the courtroom:
“I didn’t sign because I knew this was my death certificate for the future…I have spent 20 years trying to make this sport grow as a driver and for the last five years as a team owner. 23XI is doing our part. You can’t have someone treat you this unfairly, and I knew it wasn’t right. They were wrong, and someone needed to be held accountable.”
NASCAR’s response and what the future holds.
NASCAR, run for 76 years by the France family, denies violating antitrust laws and argues its business practices are normal for major sports organizations. It says the 2025 charter structure increases payouts to teams and that cars can also enter races as “open teams,” competing for four non-chartered spots each week. Notably, pre-trial filings also revealed that NASCAR made more than $100 million in revenue in 2024. While 23XI and Front Row successfully made every race this way in 2024, they say the system cost them millions in cash annually, and needs to change.
If 23XI Racing and Front Row Motorsports win the case, the outcome could be massive. The judge has the authority to break up a monopoly, meaning anything from financial damages to dismantling NASCAR’s charter system — or even forcing a sale of NASCAR itself — is on the table. It’s unclear if Michael Jordan will take the stand to testify during this heated battle.
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Why Is Michael Jordan Suing NASCAR? was originally published on cassiuslife.com
