23XI Racing and Front Row Motorsports file injunction to remain chartered entries during Nascar lawsuit

• Lawyer representing teams says Nascar is “poster child for being an illegal monopoly”
• FRM owner Bob Jenkins claims outfit have not made profit in 20 years

23XI Racing and Front Row Motorsports (FRM) have filed for an injunction that would allow them to continue competing as chartered entries next season while their lawsuit with Nascar proceeds.

The two Cup Series teams did not sign the proposed charter agreement last month that convinced the rest of the field, claiming they ‘did not have an opportunity to fairly bargain for a new charter contract’.

Now, according to a filing in the Western District Court of North Carolina, 23XI and FRM are seeking a particular clause to be waived so that they can continue competing under the charter agreement until the case is resolved.

The teams interpret that particular clause as barring any team from taking antitrust action against the governing body, so they are looking for this to be cleared up before their current charters expire at the end of this year.

Charters were introduced for the first time in 2016, with that original agreement being extended until the end of this season in 2020. The idea was to create stability in the teams and encourage increased business certainty.

Simply put, the charter system guarantees entry to each race and, therefore, a portion of the purse. Through owning a charter, the value of the team increases beyond its physical assets as prospective sponsors are able to evaluate the long-term benefits of investing.

As part of the current agreement, teams receive around 39 per cent of the broadcast contract, which includes the race purse payouts. Overall, 51 per cent goes to Nascar and ten per cent goes to the tracks.

BlackBook Motorsport understands that the latest proposal signed by the majority of the teams gives them the largest percentage cut of the new broadcast deal, ahead of both Nascar and the tracks.

As part of the legal process, the teams are also asking for an expedited discovery process, which would allow access to key financial records and communications between Nascar executives before the hearing.

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Jeffrey Kessler, a top sports lawyer representing both teams, gave a candid interview on SiriusXM Nascar Radio last week detailing the teams’ position.

“Nascar is the poster child for being an illegal monopoly,” he said. “It is the only premier stock-car racing circuit in the country, maybe in the world. It got that position not by being the best, or by investing money, or by having the best thing out there that nobody competes with.

“It got there by acquiring its competitors, tying up the racetracks, going to all the teams who are independent contractors and saying, ‘you can’t go race at anybody else’s races,’ and imposing restrictions on the cars where the teams can’t even take their next-gen car and put it in another race. All of that gives them this monopoly power.”

The filings also reveal some new details about the teams, including that FRM has never made a profit despite being in existence for 20 years. Also, the payout from the Daytona 500 represents 15 per cent of the purse from the entire season.

Team owner Bob Jenkins also revealed that, if the team was forced to run as an ‘open car’ rather than a chartered entry next season, the payout from the purse would be so low that it would not cover the costs of going to the racetrack.

23XI president Steve Lauletta reportedly wrote that Nascar president Steve Phelps informed him the charter system would disappear altogether if not enough teams signed the agreement.