Michael Jordan's 23XI and a 2nd team sue NASCAR over revenue sharing model

CHARLOTTE, N.C. (AP) — Two NASCAR teams — one of them owned by Michael Jordan — filed a federal antitrust lawsuit against the stock car series and chairman Jim France on Wednesday, claiming the new charter system limits competition by unfairly binding teams to the series, its tracks and its suppliers.

23XI Racing and Front Row Motorsports filed suit in the Western District of North Carolina in Charlotte after two years of contentious negotiations between the privately owned National Association for Stock Car Auto Racing and the 15 charter-holding organizations in the series' top Cup Series.

“The France family and NASCAR are monopolistic bullies,” the teams said in the lawsuit, a copy of which was obtained by The Associated Press. “And bullies will continue to impose their will to hurt others until their targets stand up and refuse to be victims. That moment has now arrived.”

NASCAR in early September presented its final offer on what is essentially a revenue sharing model; 13 organizations signed, with most saying they did so under duress or felt threatened into doing so.

But 23XI Racing, the team co-owned by Jordan and veteran driver Denny Hamlin, and the smaller Front Row team refused to sign. They hired Jeffrey Kessler, a top antitrust attorney who has represented the players in all four major professional North American sports, helped push the NCAA toward an era of paid college athletes and won a landmark equal pay settlement for members of the U.S. national women’s soccer team.

The lawsuit seeks details from NASCAR and France “related to their exclusionary practices and intent to insulate themselves from any competition.” Kessler said he would ask for a preliminary injunction that will enable the two teams to compete in 2025 under the new charter agreement while the litigation proceeds.

The teams said they will seek treble damages for anti-competitive terms that have ruled the sport since the initial 2016 charter agreement.

“Everyone knows that I have always been a fierce competitor, and that will to win is what drives me and the entire 23XI team each and every week out on the track,” said Jordan, the retired NBA superstar. “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. Today’s action shows I’m willing to fight for a competitive market where everyone wins.”

A NASCAR spokesman said the series does not comment on pending litigation. NASCAR is based in Daytona Beach, Florida.

The charter system introduced in 2016 included revenue sharing and other elements of the business for the top motorsports series in the United States while guaranteeing 36 entries in every lucrative Cup Series race. Of the 19 team owners who were originally granted charters in 2016, the lawsuit says, only eight remain in the sport.

One of the departing teams was Furniture Row Motorsports, which sold its charter for $6 million at the end of the 2018 season — a year removed from winning the Cup Series championship — proof, the plaintiffs say, that the charters left the teams without a path to profitability.

The original charters lasted from 2016 through 2020 and were automatically renewed to continue through Dec. 31, 2024. With expiration looming, teams argued the revenue sharing is unfair and demanded a larger share of the pot.

Front Row owner Bob Jenkins has maintained he’s never turned a profit since forming his team in 2005. He won the Daytona 500 in 2021 with driver Michael McDowell, and failed to break even in that banner season.

With four sons and a desire to leave something for his family to run, Jenkins said he wants a fair agreement.

“I have been part of this racing community for 20 years and couldn’t be more proud of the Front Row Motorsports team and our success. But the time has come for change,” Jenkins said. “We need a more competitive and fair system where teams, drivers, and sponsors can be rewarded for our collective investment by building long-term enterprise value, just like every other successful professional sports league.”

During negotiations, the teams asked for more revenue, a voice in governance and rule-making, and a cut from deals NASCAR earns off the names, images and likenesses of the participants.

The teams also wanted the charters to be permanent; France has refused.

According to the suit, NASCAR presented a take-it-or-leave-it offer on Friday, Sept. 6, 48 hours before the playoffs began. It says NASCAR threatened teams to sign the more than 100-page agreement or risk losing not only their charters but the charter system itself unless “a substantial number of teams” agreed.

“The teams knew that fielding a NASCAR car had become so expensive that it would be economically devastating for most of them to compete without even the modest revenue sharing and stability provided by the charter system and the complete loss of their charter values if the charter system was discontinued,” the lawsuit claims.

Rick Hendrick, the winningest owner in NASCAR history, has said he signed only because he was worn down by the negotiations. 23XI Racing and Front Row held out but their motivation remained unclear until Wednesday’s court filing.

The suit argues NASCAR violated the Sherman Antitrust Act by preventing any stock car racing team from competing on the circuit “without accepting the anticompetitive terms” it imposes.

“Faced with a take-it-or-leave-it offer, and no competing opportunity for premier stock car racing in the United States, most of the teams concluded that they had to sign,” the lawsuit states. “One team described its signing as ‘coerced,’ and another said it was ‘under duress.’

“A third team said, NASCAR ‘put a gun to our heads’ and we ‘had to sign.’ A fourth described NASCAR’s tactics as that of a 'communist regime.' None of these teams would permit their identities to be publicly revealed for fear of retribution from NASCAR.”

NASCAR was founded in 1948 by the late Bill France Sr., and has since been run first by his son, Bill Jr., then his grandson, Brian France, and now France Sr.’s second son, Jim. Ben Kennedy, the son of Bill Jr.’s daughter, Lesa, is the heir apparent to the family business.

The lawsuit maintains that NASCAR until 2016 operated under year-to-year contracts that provided no long-term viability to any team. There was no guaranteed entry into any Cup Series event or prize money, and teams depended on individual sponsorships they had to find themselves.

That model made sustainability next to impossible for any owner who tried to operate exclusively as a racing team without additional outside businesses. Chasing sponsorship became a full-time job and teams often found themselves competing with NASCAR outright for financial deals.

The teams felt they were operating in a “constant state of financial vulnerability” that put some of the most successful organizations out of business, the lawsuit states. It quotes NASCAR Hall of Famer Jimmie Johnson, who has mostly retired as a driver and is the co-owner of a fledgling Cup Series team.

“In the words of NASCAR Hall of Famer Jimmie Johnson,” the lawsuit says, “the best thing to be is NASCAR, the second best a driver and the last thing a team owner.”

AP auto racing: https://apnews.com/hub/auto-racing

FILE - 23XI Racing co-owner Michael Jordan stands in the pit area during a NASCAR Cup Series auto race at Talladega Superspeedway, Sunday, April 21, 2024, in Talladega. Ala. (AP Photo/Mike Stewart, File)

Corey LaJoie (51) and Joey Logano (22) race side-by-side as the head down the front straightaway during a NASCAR Cup Series auto race at Kansas Speedway in Kansas City, Kan., Sunday, Sept. 29, 2024. (AP Photo/Colin E. Braley)

Tyler Reddick (45) has his tires changed on pit road during a NASCAR Cup Series auto race at Kansas Speedway in Kansas City, Kan., Sunday, Sept. 29, 2024. (AP Photo/Colin E. Braley)

Denny Hamlin (11) leads Chase Briscoe (14) and Christopher Bell (20) during a NASCAR Cup Series auto race, Saturday, Sept. 21, 2024, in Bristol, Tenn. (AP Photo/Wade Payne)

Denny Hamlin (11) leads Chase Briscoe (14) and Christopher Bell (20) during a NASCAR Cup Series auto race, Saturday, Sept. 21, 2024, in Bristol, Tenn. (AP Photo/Wade Payne)

American former professional basketball player Michael Jordan, center, gestures as he attends the Champions League opening phase soccer match between Monaco and Barcelona at the Louis II stadium, in Monaco, Monaco, Thursday, Sept. 19, 2024. (AP Photo/Laurent Cipriani)

NEW YORK (AP) — U.S. stocks are drifting Wednesday, and Treasury yields are rising following an encouraging update on the U.S. job market's strength.

The S&P 500 was basically flat in midday trading, a day after sliding from its record on worries about a possible widening of the fighting in the Middle East. The Dow Jones Industrial Average was up 21 points, or 0.1%, as of 11:15 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.

Oil prices rose again as the world waits to see how Israel will respond to Tuesday's missile attack from Iran, but they pared their gains as the morning progressed. After hitting $76 earlier, the price for a barrel of Brent crude was sitting at $74.49, up 1.3% from the day before.

While Israel is not a major producer of oil, Iran is, and a worry is that a broadening war could affect other neighboring countries that are also integral to the flow of crude.

In the bond market, Treasury yields rose after a report indicated hiring by U.S. employers outside the government may have been stronger last month than expected.

The report from ADP Research said private-sector employers accelerated their hiring to a pace of 143,000. That could be an encouraging signal for the more comprehensive report on the U.S. job market that’s arriving on Friday from the U.S. government.

The dominant question hanging over Wall Street has been whether the job market will continue to hold up after the Federal Reserve earlier kept interest rates at a two-decade high in hopes of braking on the economy enough to stamp out high inflation.

Stocks are near their records in large part because of hopes that the U.S. economy will indeed continue to grow, now that the Federal Reserve is cutting interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years, and it’s indicated it will deliver more cuts through next year.

The yield on the 10-year Treasury rose to 3.79% from 3.73% late Tuesday. The two-year yield, which more closely follows expectations for what the Fed will do with overnight interest rates, rose to 3.63% from 3.61%.

Traders are swinging their expectations for the Fed’s next move on rates to be a traditional-sized cut of a quarter of a percentage point, according to data from CME Group. Last week, more were betting on a larger cut of half a percentage point.

On Wall Street, Caesars Entertainment jumped 6.3% for the biggest gain in the S&P 500. The casino owner said it approved a new program to deliver up to $500 million to shareholders by buying back more of its stock.

Exxon Mobil rose 0.9% as crude prices continued to rise, bringing its gain for the week to 4.5%.

They helped offset a 17.8% tumble for Humana after the insurer warned a drop in its quality ratings for Medicare Advantage could mean a hit to its revenue in 2026. Humana said it believes there may be errors in the Centers for Medicare and Medicaid Services’ calculations, and it is trying to challenge the ratings.

Nike sank 5.2% even though the athletic giant reported stronger profit for the latest quarter than analysts expected. Its revenue fell short of forecasts, and the slump shows how much work incoming CEO Elliott Hill has in making the brand cool among customers. Nike also pulled its forecast for full-year financial results and postponed its investors day conference.

Conagra Brands fell 9.7% after the company behind Duncan Hines and Reddi-wip reported weaker profit than analysts expected. It said temporary manufacturing disruptions at its Hebrew National business during prime grilling season hurt its results.

Tesla sank 3.9% even though it reported an increase in its deliveries of electric vehicles during the latest quarter, the first time that’s happened this year. The number topped analysts’ forecasts, but investors may have been expecting an even bigger increase.

In stock markets abroad, Hong Kong’s Hang Seng roared 6.2% higher, riding a wave of investor enthusiasm over recent announcements from Beijing to rev up the Chinese economy. With Shanghai and other markets in China closed for a holiday, trading crowded into Hong Kong.

Japan’s Nikkei 225 lost 2.2% to continue its sharp swings, while indexes in Europe were mixed.

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

FILE - Signs marking the intersection of Broad and Walls Streets appear near the New York Stock Exchange on Oct. 1, 2024, in New York. (AP Photo/Peter Morgan, File)

The New York Stock Exchange, right, is shown on Tuesday, Oct. 1, 2024, in New York. (AP Photo/Peter Morgan)

A person walks in front of the Tokyo Stock Exchange building Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

A person walks in front of the Tokyo Stock Exchange building Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

A person looks at an electronic stock board showing Japan's Nikkei index at a securities firm Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

People stand in front of an electronic stock board showing Japan's Nikkei index at a securities firm Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

People watch an electronic stock board showing Japan's Nikkei index at a securities firm Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)

A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Wednesday, Oct. 2, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)