Michael Jordan and Heather Gibbs Take Center Stage as NASCAR Antitrust Trial Enters Critical Phase

The Western District of North Carolina courtroom buzzed with anticipation Friday afternoon as NBA legend and 23XI Racing co-owner Michael Jordan took the stand, marking a pivotal moment in the ongoing antitrust lawsuit filed by 23XI Racing and Front Row Motorsports against NASCAR. The trial, which has scrutinized NASCAR’s market power and its impact on race teams, entered its first week’s conclusion with testimony from prominent figures in the sport.

The lawsuit centers on the assertion that NASCAR operates as a monopsony, a market structure where a single buyer controls the purchase of a particular good or service. In this context, NASCAR is alleged to be the sole purchaser of premier stock car racing teams. The core question before the jury is whether this market dominance was leveraged to stifle competition and suppress earnings for race teams, particularly during the recent charter extension negotiations.

Jordan, who co-owns 23XI Racing with Cup Series driver Denny Hamlin and longtime associate Curtis Polk, is a central figure in the legal challenge against NASCAR and its CEO, Jim France. The 15-month legal process has now culminated in this high-stakes trial.

The plaintiffs, 23XI Racing and Front Row Motorsports, contend that NASCAR’s alleged anticompetitive practices prevented them from securing greater revenue. Their argument posits that the sanctioning body’s actions, including potentially preventing the emergence of new competition, unfairly impacted the financial standing of race teams.

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Despite a period of contentious negotiations spanning over two years, 13 of the 15 Cup Series teams ultimately signed the charter extension. However, 23XI Racing and Front Row Motorsports, owned by Jordan and Denny Hamlin, and Bob Jenkins respectively, held out.

"Someone had to step forward to challenge NASCAR," Jordan stated during his testimony, emphasizing his belief in the necessity of confronting the established order.

A significant portion of Jordan’s testimony focused on drawing parallels between NASCAR’s operational structure and that of the National Basketball Association (NBA), where he achieved unparalleled success. He advocated for a revenue-sharing model more akin to the NBA, where league and team revenues are divided more equitably, fostering a shared responsibility for the sport’s growth. "If you share responsibility, the healthiness of the sport can grow," Jordan explained. "It needed to be looked at from a whole different perspective. That’s why we’re here."

NASCAR’s defense, presented by attorney Lawrence Buterman, hinges on the argument that the organization is privately owned by the France family and does not operate under the same team-ownership paradigm as traditional "stick-and-ball" leagues. Buterman asserted that NASCAR’s private ownership structure differentiates it from leagues where teams are effectively co-owners. Jordan, however, countered this by suggesting that such privately owned sports ventures are "rarely successful."

Jordan’s personal investment in 23XI Racing underscores his commitment to the sport. He is the majority owner, having injected an estimated $35 to $40 million into the team, which was initially conceived as "Michael Jordan Motorsports with Denny Hamlin." This significant financial commitment was made despite cautionary advice from Curtis Polk, his business associate of 35 years, who deemed NASCAR a "risky to (his) brand and image" and a potential source of substantial financial loss.

Despite these risks, Jordan, a self-proclaimed lifelong NASCAR fan, was drawn to Hamlin’s vision for the team. His initial projections indicated that a NASCAR team could achieve a profit of approximately $900,000. When questioned about the team’s profitability, Jordan affirmed, "Yes."

However, Jordan maintains that even with the team’s success, attributed to professional management and his own star power, the current charter system is inequitable. His initial optimism upon entering NASCAR reportedly gave way to a realization of the sport’s "unfair" economic model.

The escalating cost of charters, with the third acquired by 23XI costing $28 million after a second at $13.5 million and an initial purchase at $4.7 million, has been a point of contention. Jordan explained his continued acquisition of charters by stating, "There was a discussion between me and Denny about being successful… people who know me know I like to win and I will pursue anything to win and getting a third charter improves our chance to win the championship." He acknowledged being "very invested" in the sport and acting on the limited opportunities to acquire charters, even amidst the charter negotiation deadlock. Jordan expressed a hope for a more collaborative business model, stating, "The thing I’m hoping for is you create more of a partnership between two entities… If that’s the case, it becomes a more valuable business. If you can ever compromise on the things that matter, you can grow your business."

NASCAR’s defense has sought to characterize Curtis Polk as an outsider whose primary objective was to instigate legal action. Evidence presented included documents where Polk allegedly expressed finding races "boring as shit" and "painful to watch." Buterman used this to suggest that while Jordan and Hamlin are genuine enthusiasts, Polk’s involvement was purely transactional. When asked if Polk enjoyed racing, Jordan conceded, "Obviously not."

Further evidence presented by NASCAR included a text message from Polk to Jordan stating, "our plan is to be a pest and have a mosquito bite every week," referring to charter negotiations. This plan involved leaking financial proposals to the media, a tactic Jordan appeared to endorse with a thumbs-up emoji. Polk’s communications also indicated his intention to "educate" teams on why lower charter value proposals, such as an $11 million per car figure from smaller teams, were unacceptable, contrasting with 23XI and Front Row’s demand for $20 million per car. Jordan again responded with a thumbs-up emoji to Polk’s communication about sending a letter with "alternative evergreen language."

A moment of levity occurred at the session’s end when Buterman thanked Jordan for his time, adding, "Thank you for making my nine year old think I’m cool." Jordan playfully responded, "You’re not wearing your Jordans today," to which Buterman confirmed, "I’m not."

While Jordan’s testimony garnered significant attention, Heather Gibbs, daughter-in-law of team founder Joe Gibbs, was considered by many observers to be the most impactful witness of the day. Gibbs spoke publicly for the first time about the November 2022 death of her husband, Coy Gibbs, heralding a significant personal chapter interwoven with the team’s operational challenges. She described her deep affection for Coy and their shared passion for racing, a sentiment that has fueled her increased involvement in Joe Gibbs Racing’s day-to-day operations and charter negotiations following her husband’s passing.

Gibbs articulated the "very challenging" financial realities faced by Cup Series teams, particularly those, like Joe Gibbs Racing, that lack external business interests to offset potential losses. She revealed authoring a strong letter to NASCAR leadership in response to league commissioner Steve Phelps’ assertion that team spending was "reckless." While acknowledging her belief in the need for a revised economic model for NASCAR, Gibbs expressed respect for the France family.

The pressure surrounding the charter signing deadline was palpable. Joe Gibbs reportedly pleaded with Jim France, "don’t do this to us," regarding the perceived "gun to the head" ultimatum presented by NASCAR leadership. Heather Gibbs detailed that the final charter agreement, received at 5 p.m. on September 6 and requiring a signature by 6 p.m., contained numerous grammatical and syntactical errors. NASCAR’s offer to rectify these through side letters did not alleviate concerns, particularly regarding the absence of guaranteed broadcast revenue beyond the initial seven years of the extension. Gibbs recounted France’s dismissive response to their concerns: "’I’m done with the conversation’ and ‘If I wake up and I have 20 charters, I have 20 charters.’"

Gibbs ultimately signed the agreement, driven by a desire to protect the legacies of Coy and JD, her son, and the fear of jeopardizing any potential agreement for Joe Gibbs Racing. During cross-examination, Gibbs discussed the concept of charter permanency, distinguishing her use of "auto-renewal with terms" from "evergreen" or "permanent" charters, noting Jim France’s apparent aversion to the word "permanent." Team representatives have consistently argued that permanent charters would enhance enterprise values, irrespective of the specific terms.

NASCAR President Steve O’Donnell spent nearly five hours on the stand over two days, concluding his testimony Friday morning. His testimony addressed NASCAR’s reaction to the Superstar Racing Experience (SRX) and the potential for teams to launch a competing series. O’Donnell stated that over 1,000 tracks in the U.S. could host such a series, with only 30 having NASCAR exclusivity clauses. He cited examples of tracks with such clauses, including Hickory Motor Speedway, South Boston Speedway, Barber Motorsports Park, Road America, Pikes Peak International, and Kern County Raceway. O’Donnell also suggested that a rival series could potentially partner with IndyCar and utilize street courses.

O’Donnell expressed concern over SRX’s emergence, citing a call from NBC Sports executive Sam Flood that questioned the viability of their rights agreement should a NASCAR variant appear on competing networks. He specifically mentioned seeing Chase Elliott in an SRX race as a cause for alarm. O’Donnell’s claim that SRX is "coming back" was contradicted by multiple sources associated with the series, who confirmed no such plans are in motion. GMS Race Cars’ purchase of physical assets from SRX co-founder Ray Evernham was for track day purposes, not for reviving the series itself.

NASCAR’s defense team has framed the non-compete clauses as a byproduct of negotiation, aimed at securing "good faith" commitments from teams in exchange for guaranteed revenue and starting spots. O’Donnell stated, "It was about being all in together, working towards the best broadcast deal."

A central tenet of NASCAR’s defense is the increase in charter payouts and enterprise values, which rose from approximately $1 million in 2016 to $45 million in the past season. O’Donnell presented this as evidence of the sport’s health and investor confidence, despite ongoing litigation. However, 23XI and Front Row argue that their charters would be worth significantly more, potentially exceeding $100,000 on the open market, if they were permanent. O’Donnell countered that charters were "not originally put together to be permanent," citing the evolving nature of schedules and cars.

Discussions around a cost cap and cost floor, proposed for the 2025 charter negotiations but not realized, were also prominent. NASCAR aims for a cost cap to curb perceived "reckless spending." O’Donnell described team sentiment on cost caps as split, with dominant teams like Penske, Gibbs, and Hendrick potentially less enthusiastic than middle-tier teams. He pointed to Formula 1’s cost cap system as a factor in increased team enterprise values. The proposed cost floor, however, faced challenges, with some teams reporting they already operate below the suggested spending threshold.

The plaintiffs’ "four pillars" proposal, which included a demand for $720 million (equating to $20 million per chartered entry), was described by O’Donnell as "shocking," particularly in light of the previous rights agreement being $800 million annually. He argued that such an allocation would leave insufficient funds for tracks and hinder overall industry growth. He contrasted this with IndyCar, where teams reportedly receive 25 percent of revenue, equating to approximately $2-2.5 million per car. In re-examination, the plaintiffs’ counsel, Kessler, disputed this, stating IndyCar’s TV deal yields $8 million per entry, translating to $20 million or more for teams.

O’Donnell also elaborated on his interactions with Curtis Polk, describing them as "the most difficult meeting I’ve had with an individual in my 30 years in NASCAR." NASCAR’s perspective is that Polk, lacking appreciation for the sport, intended to disrupt the status quo and precipitate litigation. "Mr. Polk stuck to his messages," O’Donnell stated. "He did not have an appreciation for the sport. He was a businessman who said he could leave anytime. He threatened to kick me out of my own meeting… He wasn’t coming from a place of respect."

Kessler probed O’Donnell on whether NASCAR executives, such as Steve Phelps, consistently demonstrated respect towards team owners, referencing discovered text messages where Phelps allegedly referred to Richard Childress as a "stupid redneck" who "needs to be taken out back and flogged." NASCAR’s legal team objected to this line of questioning, as the inflammatory text messages were barred from being used as exhibits.

Judge Kenneth D. Bell, overseeing the case, cautioned NASCAR’s counsel that "growing the sport" is not a valid defense and could be construed as a self-admission of seeking increased revenue. He also informed the jury that the trial is likely to extend beyond its scheduled 10-day duration, acknowledging the burden on their service. The judge expressed his commitment to expediting proceedings, with a revised estimated conclusion around December 15th or 16th. He commended the jury for their attentiveness and dedication.

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