Shortly after the appeal was filed, the parties agreed to allow the Plaintiffs to compete under a modified "open agreement.” This agreement allows Plaintiffs to compete in the upcoming season while this litigation proceeds. Though this agreement does not include the highly contested release, the release provision remains in the Charter at the center of this lawsuit.
On November 20, defendants stated they dropped their appeal due to changes in circumstances in the underlying case.
But, on November 26, Plaintiffs formally re-filed their request for preliminary injunction. This new motion, submitted with additional evidence, asks the judge to grant the Plaintiffs Charter status during the duration of their lawsuit. Plaintiffs now allege imminent and irreparable harm if the injunction is not granted. Plaintiffs argue that the request should be decided by the end of the year when their current Charter Agreements expire.
What is the Charter Agreement?
The NASCAR Charter guarantees that 36 race car signatories will have a spot in the field for NASCAR events and that each chartered car will be entitled to a share of the race purse. To retain their Charter, teams and cars must meet specific minimum standards. NASCAR has the option not to renew a Charter if a car finishes in the bottom three of the standings for three consecutive years.
Additionally, as a part of the original Charter, NASCAR agreed to restrict the supply of charters to 36 race cars per year. In return, teams agreed to only race their chartered cars in NASCAR-sanctioned events. This arrangement allows chartered cars to build their brand, secure sponsorships, and increase their car's value in connection with their Charter.
Teams not signed to the Charter race as open teams or open cars. These open cars do not have the same guarantees as chartered cars and occupy one of four open spots in each NASCAR race. Each NASCAR race features 40 cars: 36 chartered cars and four open cars, and open cars compete at qualifying to fill those spots. A portion of the race purse is only guaranteed to cars that qualify.
The current Charter expires at the end of 2024, and the 2025 Charter has been imposed on a largely unilateral basis. All but two teams, the Plaintiffs, have signed it. Plaintiffs allege that NASCAR threatened to eliminate the Charter System if most teams did not sign the new Charter. Plaintiffs alleged that this threat from NASCAR left teams with the impression that they had no choice but to sign the Charter.
What are the Alleged Antitrust Violations?
Plaintiffs allege that NASCAR has violated Sections 1 and 2 of the Sherman Act, by entering into anticompetitive agreements, like the Charter, with racetrack owners and racing teams and by acting to further its monopoly in the United States' market for premier stock car racers.
Sherman I: Conspiracy
Plaintiffs allege that NASCAR violated Section 1 of the Sherman Act by entering into anticompetitive agreements with racetrack owners and racing teams.
NASCAR's agreements with racetrack owners include explicit exclusive dealing provisions, stating that they cannot host non-NASCAR racing events. This often leads to racetracks sitting empty for most of the year, negatively impacting the racetrack's demand for premier stock car racing and limiting the supply of racetracks for other stock car racing circuits attempting to enter the market.
The Charters with racing teams serve to restrict the teams' ability to market their services to other circuits. Each agreement includes a non-compete provision prohibiting a chartered team from racing in other racing circuits. The 2025 Charter expands that coverage, prohibiting participation in non-NASCAR "automobile or truck racing." Additionally, the new Charter establishes standards for "next gen" cars, setting specific parts and performance requirements, granting NASCAR ownership over the car, and granting NASCAR the final say for when a damaged part must be replaced, mandating its single-source supplier for those parts. By maintaining ownership, NASCAR limits each team's ability to obtain returns on the investments made in their cars, and the team’s ability to use their cars in non-NASCAR events.
Sherman II: Monopoly
Plaintiffs allege that NASCAR has violated Section 2 of the Sherman Act by repeatedly acting in furtherance of its monopsony power in the buyer's market for premier stock car racing in the United States.
Plaintiff alleged the conduct spans over decades, but they focus primarily on the last 10 years. Plaintiffs cite NASCAR's purchase and subsequent relegation of upcoming competitors in the market and the 2025 Charter Agreement's antitrust release provision as direct acts in furtherance of NASCAR's monopsony power. In 2019, NASCAR purchased the ARCA and ARCA Menards Series and the International Speedway Corporation (“ISC”). These purchases served to relegate NASCAR’s strongest competitor to feeder-circuit status, and solidified NASCAR’s grasp on the nation’s premier racetracks. Notably, the ISC’s executive board is led by a member of the France family.
Lastly, Plaintiffs argue that the antitrust release provision included in the Charter would serve to protect NASCAR’s continued monopsony. Though ambiguous, Plaintiffs allege that the provision included in the Charter would force chartered teams to release any antitrust claims that may arise, the implication being that NASCAR would be protected if any of its chartered teams were to pursue litigation that would threaten NASCAR’s monopsony power.
What Can We Expect Moving Forward?
23XI Racing and Front Row Motorsports have signed modified Open Agreements, allowing them to participate in the upcoming racing season while the litigation proceeds. Plaintiffs continue to pursue an injunction that would allow them to sign the new Charter while allowing litigation to continue.
On December 3, it was reported that NASCAR considers the 2025 Charter “off the table” for Plaintiffs. If that is to be believed, for Plaintiffs to regain Charter status, it will likely require Court intervention.
As of now, the future of this case is at the courts’ discretion. If the case proceeds to trial, the courts will apply a Rule of Reason analysis to determine if the procompetitive benefits outweigh the alleged anticompetitive effects of NASCAR's actions.
An interesting parallel may be drawn between the antitrust saga of LIV Golf and the PGA Tour. In that case, Plaintiffs alleged that the PGA had engaged in an illegal group boycott with the European Tour that foreclosed LIV Golfers from competing in events. While that situation was ultimately settled, one significant outcome of this case was that it allowed players to compete in PGA Tour events, regardless of their affiliation with LIV Golf.
If history is any indication, we may be moving toward a future where the NASCAR Charter System ceases to exist or is modified in a manner that will allow racing teams to participate in non-NASCAR events. Time and the Western District of North Carolina will tell.
