rifan muazinCharlotte, NC – The Western District of North Carolina courtroom buzzed with anticipation Friday afternoon as basketball icon and co-owner of 23XI Racing, Michael Jordan, took the stand to conclude the first week of the landmark antitrust lawsuit brought forth by 23XI Racing and Front Row Motorsports against NASCAR. The high-profile testimony, alongside that of Heather Gibbs, daughter-in-law of racing legend Joe Gibbs, underscored the critical juncture the 15-month legal battle has reached.
At the heart of the legal proceedings is the jury’s determination of whether NASCAR, having been ruled a monopsony—a single buyer in the market for premier stock car racing teams—exercised its market power to anticompetitively suppress team earnings, particularly during the recent charter extension negotiations. 23XI Racing, co-owned by Jordan, NASCAR Cup Series driver Denny Hamlin, and longtime business associate Curtis Polk, along with Front Row Motorsports owner Bob Jenkins, opted not to sign the latest charter extension, a move that distinguishes them from the 13 other Cup Series teams that did.
Jordan, a majority owner who has invested an estimated $35 to $40 million into 23XI Racing, articulated his reasoning for challenging NASCAR’s established practices. "Someone had to step forward to challenge NASCAR," Jordan stated during his testimony, drawing a parallel to the revenue-sharing models of the National Basketball Association (NBA), where he achieved unparalleled success. He advocated for a more equitable distribution of revenue and shared growth responsibilities, arguing that such a partnership fosters a healthier, more prosperous sport. "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 sanctioning body is a privately owned entity, distinct from leagues where teams hold ownership stakes. Buterman contended that NASCAR is not obligated to operate under the same revenue-sharing principles as publicly traded sports leagues. Jordan, however, countered that such privately owned sports ventures are "rarely successful."
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Despite initial counsel from Polk, who warned of risks to his brand and potential financial losses, Jordan committed to Hamlin’s vision for 23XI Racing, originally dubbed "Michael Jordan Motorsports with Denny Hamlin." Jordan acknowledged being a lifelong NASCAR fan and expressed his belief in the team’s potential for profitability, projecting a $900,000 profit. While 23XI Racing has achieved profitability under professional management and Jordan’s star power, he maintains that the current charter system’s structure is inequitable. He detailed his increasing investment in charters, with the third charter costing $28 million, following a $13.5 million purchase and an initial $4.7 million acquisition. "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," Jordan testified. He emphasized his deep investment in the sport and the strategic imperative to secure limited charter opportunities, even amidst the contentious negotiations.
NASCAR’s defense team has sought to portray Curtis Polk as an outsider whose primary objective was to disrupt the status quo and instigate legal action. Evidence presented included texts where Polk allegedly described races as "boring as shit" and expressed a strategy to be a "pest" and a "mosquito bite every week" during negotiations by leaking financial proposals to the media. Jordan confirmed Polk’s lack of enthusiasm for the sport itself, stating, "Obviously not," when asked if Polk enjoyed racing as much as he and Hamlin. This tactic aimed to differentiate the motivations of Jordan and Hamlin, who are presented as genuine stakeholders in the sport, from Polk’s perceived business-driven agenda.
While Michael Jordan’s testimony drew significant attention, Heather Gibbs’s presentation proved equally impactful. Gibbs, who spoke publicly for the first time about the November 2022 death of her husband, Coy Gibbs, son of team founder Joe Gibbs, detailed her deepening involvement in Joe Gibbs Racing (JGR) and the charter negotiations following her husband’s passing. She underscored the significant financial pressures faced by teams like JGR, which rely solely on racing revenue to sustain operations. Gibbs recounted writing a strongly worded letter to NASCAR leadership in response to comments made by league commissioner Steve Phelps regarding perceived "reckless" team spending. Despite her respect for the France family, Gibbs expressed her belief that NASCAR requires a revised economic model.
Gibbs described the charter extension deadline as a "gun to the head" proposition. She recounted a conversation where Joe Gibbs implored Jim France, "don’t do this to us." The final draft of the agreement, she stated, was delivered at 5 p.m. on September 6th with a signing deadline of 6 p.m., despite containing grammatical and syntax errors. Furthermore, she highlighted concerns that the agreement did not guarantee broadcast revenue beyond the initial seven years. When she contacted Jim France with these concerns, his reported response was, "I’m done with the conversation" and "If I wake up and I have 20 charters, I have 20 charters." Ultimately, Gibbs signed the agreement, driven by the legacy of Coy and JD Gibbs, and the risk of losing all contractual standing.
During cross-examination, Gibbs discussed the concept of charter permanency, comparing it to the franchise models in traditional sports leagues. She explained her use of "auto-renewal with terms" instead of "evergreen" or "permanent" due to Jim France’s apparent aversion to the word "permanent." Team owners, however, assert that permanent charters would significantly increase enterprise values, a key objective for their businesses.
NASCAR President Steve O’Donnell concluded a substantial portion of his testimony this week, having spent nearly five hours on the stand. His testimony addressed NASCAR’s reaction to the Superstar Racing Experience (SRX) and the potential for teams or SRX to launch a competing series. O’Donnell detailed that over 1,000 tracks exist in the U.S., with only 30 having NASCAR exclusivity clauses, suggesting ample opportunities for a competitor. He expressed concerns about SRX’s viability and potential impact on NASCAR’s broadcast rights agreements, particularly after witnessing NASCAR driver Chase Elliott participate in an SRX event. O’Donnell claimed SRX was not damaged by NASCAR, citing its eventual acquisition of physical assets by GMS Race Cars for track day purposes, though Motorsport.com confirmed that no SRX comeback is currently planned.
NASCAR’s defense has characterized non-compete clauses as a byproduct of negotiations aimed at securing a unified approach to broadcast deals, where teams received guaranteed revenue and starting spots in exchange for these commitments. O’Donnell highlighted the substantial increase in charter payouts and enterprise values, from $1 million in 2016 to $45 million in the past season, as evidence of the sport’s financial health and investor confidence, despite ongoing litigation. However, 23XI and Front Row argue that permanent charters would elevate their value by over $100,000 per charter. O’Donnell countered that charters were not initially designed for permanence, citing the evolving nature of the sport.
Discussions also revolved around a proposed cost cap and cost floor for the 2025 charter negotiations. O’Donnell indicated that team sentiment on a cost cap is divided, with dominant teams like Penske, Gibbs, and Hendrick potentially resistant, while mid-tier teams are more receptive. He cited Formula 1’s cost cap system as a factor in increased team enterprise values. The proposed cost floor, however, presented challenges for some teams already operating below that threshold.
The plaintiffs’ "four pillars" proposal, seeking $720 million annually (equivalent to $20 million per chartered entry), was a point of contention. O’Donnell expressed shock at this figure, given the previous rights agreement was only $800 million per year, arguing that such an allocation would leave insufficient funds for tracks and hinder overall industry growth. He contrasted this with IndyCar, where teams receive approximately 25% of revenue, translating to $2-2.5 million per car. In re-examination, the plaintiffs’ counsel, Kessler, contested this, suggesting IndyCar’s TV deal yields $8 million per entry, totaling $20 million or more to teams.
O’Donnell reiterated his difficulties in meetings with Curtis Polk, describing them as the "most difficult" of his 30-year NASCAR career. He characterized Polk as lacking an appreciation for the sport and operating purely as a businessman, even threatening to remove O’Donnell from his own meeting.
The trial also touched upon potentially inflammatory text messages exchanged between NASCAR executives, including league commissioner Steve Phelps, and their impact on team owner relationships. When questioned about respect for team owners like Richard Childress, O’Donnell faced an objection from NASCAR’s legal team, as the jury is not privy to the content of these messages, which have been barred as evidence.
Throughout the proceedings, District Court Judge Kenneth D. Bell has provided guidance to the jury. He cautioned NASCAR that "growing the sport" is not a valid defense, potentially implying an admission of revenue enhancement for NASCAR itself. Judge Bell also indicated that the trial is likely to extend beyond its scheduled 10-day timeframe, acknowledging the burden on the jury while striving to keep proceedings on track. The conclusion is now anticipated around December 15th or 16th.
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