Game On: NBA Legend’s Monopolization Challenge Against NASCAR To Proceed
Antitrust Litigation
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  • Game On: NBA Legend’s Monopolization Challenge Against NASCAR To Proceed

    01/22/2025

    On January 10, 2025, Judge Kenneth D. Bell of the United States Court for the Western District of North Carolina denied NASCAR’s motion to dismiss stock car racing team 23XI Racing’s (“plaintiff”) monopolization case against NASCAR (“defendant”). 2311 Racing LLC, et al. v. Nat. Ass’n for Stock Car Auto Racing, LLC, et al., 3:24-cv-00886 (W.D.N.C. Jan. 10, 2025).

    In October 2024, certain stock racing teams, including plaintiff (a team partially owned by NBA legend Michael Jordan), filed a complaint alleging defendant obtained and unlawfully maintains a monopsony in the market for premier stock car racing teams in violation of the Sherman Act. According to the complaint, defendant obtained this monopsony by (i) acquiring potential competitors, (ii) acquiring racetracks around the country, and (iii) preventing the hosting of any non-defendant racing events at their own and third-party racetracks, ensuring that few racetracks around the country could host non-defendant races.

    Plaintiff alleged defendant has used its dominant position to enforce anticompetitive provisions on racing teams in violation of the Sherman Act through charter agreements that place restraints on what teams can do. In particular, charter agreements mandate that teams (i) not participate in non-defendant authorized events, (ii) agree to a revenue sharing provision where they receive far below the alleged norm in other sports leagues, (iii) must buy car parts exclusively from defendant-approved suppliers (with defendant able to dictate replacement timelines), and (iv) pre-emptively release defendant from legal claims relating to the charter agreements. These provisions, offered on a take-it-or-leave-it basis, allegedly show how defendant used its market position to coerce teams into signing, as refusing to do so would essentially leave teams without other options.

    In his short order denying defendant’s motion to dismiss, Judge Bell found that plaintiff had sufficiently alleged plausible antitrust claims, pointing to his earlier analysis granting plaintiff’s motion for a preliminary injunction. In that opinion, he found that plaintiff was likely to succeed on its claim that certain terms of the charter agreements violate of the Sherman Act, that defendant indeed possesses monopoly/monopsony power in the market for premier stock car racing teams, stating it effectively “has a 100% market share, and likely unlawfully maintained this power through provisions of the charter agreements.

    In his ruling on the motion to dismiss, Judge Bell emphasized that the parties casted “starkly” different stories, with plaintiff presenting defendant as “the iron-fisted monopolistic ruler of premier stock car racing,” and defendant arguing “NASCAR[’s owners] … are the founders and guiding lights of a beloved and valuable racing series.” The litigation will proceed into discovery and is likely to continue making headlines, though the 23XI team will continue racing in NASCAR events as normal in the meantime.

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