Following a Monday hearing where both sides argued their case, U.S. District Court Judge Frank Whitney decided to deny the preliminary injunction filed by by 23XI Racing and Front Row Motorsports (FRM) in hopes of keeping their charters, while the antitrust lawsuit against NASCAR is ongoing.
The judge stated that the teams did not meet their burden of proof in an eight-page release, noting that they failed to clearly indicate that they would suffer irreparable harm due to the loss of charters.
The teams argued that they would risk losing sponsors, explaining that sponsors "could abandon [them] if they have to compete as open teams and do not qualify for all of the races." 23XI had noted that their sponsor agreements specifically mention that they must run all of the races, which is only a certainty when a team holds a charter. They also argued that there is a risk they could lose their drivers, as Tyler Reddick -- who is set to battle for the Cup title on behalf of 23XI in less than two days -- could terminate his contract.
The teams also teams argued that competing as an open team "could threaten [their] continued existence" due to the loss of revenue. But perhaps the most important argument is the team's assertion that "NASCAR has the power to exclude open competitors completely" under the new Charter Agreement.
The judge's reasoning
However, the judge countered by saying that anyone seeking a preliminary injunction must "demonstrate that irreparable injury is likely in the absence of the injunction ... A showing of the 'possibility of irreparable harm' is not sufficient."
It goes on to say in perhaps the most critical statement made by the judge: "Although the Plaintiffs have alleged that they will face a risk of irreparable harm, they have not sufficiently alleged present, immediate, urgent irreparable harm, but rather only speculative, possible harm. That is, although the Plaintiffs allege they are on the brink of irreparable harm, the 2025 racing season is months away -- the stock cars remain in the garage."
23XI and FRM are allowed to appeal, and they have announced their intentions to do so. A statement from attorney Jeffrey Kessler read as follows: "We are pleased with the court's decision to expedite discovery and fast track the schedule in our case against NASCAR. Although we are disappointed that the preliminary injunction was denied without prejudice and as premature, which we intend to appeal, this denial has no bearing on the merits of our case. My clients will move forward to race in 2025 and continue to fight for a more fair and equitable system in NASCAR that complies with antitrust law."
This ruling is a critical step in the teams' fight against NASCAR where they've labelled the France family as "monopolistic bullies." If the decision holds, it will have a huge impact on the financial viability of both 23XI and FRM, while also forced to race their way into the 2025 Daytona 500. To complicate this issue is the fact that both organizations have made clear their intentions to purchase a third charter from Stewart-Haas Racing as the team shuts down.
NASCAR already announced they plan to move forward with 32 charters next year instead of the usual 36. To combat this, the teams filed this motion for a preliminary injunction. 23XI co-owners Michael Jordan, Denny Hamlin, and Curtis Polk were all present at the Monday hearing, as was FRM's Bob Jenkins and Jerry Freeze.
