After over two years of a contentious negotiations process, 13 of 15 teams that compete in the NASCAR Cup Series agreed to an extension of the charter system that governs the financial and competition terms of the highest level of Stock Car racing.
For a breakdown of what the charter system is, how it works and the history of every entry that has competed within it since 2016, read this story.
How the NASCAR charter system works
The two teams that did not agree to an extension of the charter system, one that runs the length of the next broadcast rights agreement from 2025 to 2031, was 23XI Racing and Front Row Motorsports. 23XI is co-owned by Cup Series veteran Denny Hamlin and sporting legend Michael Jordan. Front Row Motorsports is owned by restaurant chain operator Bob Jenkins.
Over the course of the two plus years of negotiations, these were the issues that were volleyed back-and-forth between the team parties:
- Teams had received around a minimum of $5 million in overall revenue from the league over the previous agreement for the lowest-ranked charter and will now receive around $8.5 million (Sports Business Journal) after seeking closer to $10 million
- It takes roughly $18 million per season per car to race at the Cup level
- Race teams have said they are all losing money and that they at least wanted a system that provided them break-even revenue that made them less reliant on sponsorship
- Teams wanted the charter system to be made permanent as opposed to running the course of each television contract but NASCAR would not budge on this
- Charter permanency could make the system akin to a franchise model used in stick-in-ball sports and NASCAR rejected that conceptually
- The above concept comes down to governance as teams wanted a greater say in rules changes
- NASCAR wants to be able to field teams, at least for now, using charters pocketed for release when and if a fourth manufacturer enters the sport
- There were differences over intellectual property rights and where teams would shoot media content (in-house versus the new productions facility)
- How new revenue, like sports betting, would be split in addition to legacy revenue like broadcast rights
- NASCAR put in an anti-disparagement clause which limited critical commentary about the sanctioning body that was met with skepticism
- The core issue at play is that teams believe they are not financially rewarded for the value its cars and drivers bring to the NASCAR brand at large
How the teams that ultimately signed the final offer that came from NASCAR on September 6 remains a muddy issue. Some team owners said, anonymously, that they felt ‘strong armed’ and ‘coerced,’ one called NASCAR ‘a communist regime’ and ‘they held a gun to our head and we had to sign,’ but the likes of Brad Keselowski and Justin Marks said publicly the terms were good enough.
Rick Hendrick said he was ‘tired’ of negotiating.
Richard Childress had the bluntest public assessment over why he signed the agreement, even if he felt the terms were not agreeable:
“I didn’t have a choice,” Childress told FOX Sports. “We had to sign. I have over 400 employees, OEM contracts, contracts with sponsors. I’ve got to take care of my team.”
Even though NASCAR issued a ‘take it or leave it’ final offer, the narrative that teams were forced to sign it by midnight ‘or else’ was not entirely true as the below email from Front Row general manager Jerry Freeze and NASCAR president Steve Phelps indicated a willingness to give the two holdouts a week to review — even if refusing to reopen negotiations.
Front Row ultimately did not choose to sign the document, even by the extended deadline, and instead brought a federal antitrust lawsuit against NASCAR alongside 23XI on October 2 in the Western District of North Carolina.
The lawsuit
23XI and Front Row Motorsports claim that NASCAR is violating federal antitrust laws by controlling the market in which premier Stock Car racing teams can compete. They say that because NASCAR owns the series and a majority of tracks, while also requiring teams to purchase parts and pieces of the fourth-year NextGen cars from NASCAR-mandated suppliers, while prohibiting teams from competing in other Stock Car leagues without approval, is a violation of the law.
The teams also claim that NASCAR is using its alleged anti-competitive behavior to unfairly distribute revenue through the charter agreement.
“I did it for the smaller teams as well. It’s not just me,” said Jordan to FOX Sports on October 6. “I think everybody should have an opportunity to be successful in any business. My voice is saying that it hasn’t been happening. … Hopefully we [at both sides] can come to our senses and figure out something that can make sense for everybody.”
NASCAR appeared to have an idea the lawsuit was coming as Phelps sent a letter to 23XI on Setptember 18 addressing the core complains.
“It appears after 2+ years of negotiations with Teams, both collectively and individually, compromise and concession on both sides up until the last minute, we firmly believe that we have come up with a document that is fair and equitable to the industry. … You suggest that NASCAR somehow has ‘monopoly power’ and that 23XI and other Teams ‘depend on [NASCAR] for a competitive opportunity’ and have been presented with a ‘take-it-or-leave-it offer.’ We feel — and our attorneys have confirmed — that this contention is misplaced — and similar types of claims have already been rejected by courts.”
NASCAR also summed up its general defense on an October 16 filing:
“Plaintiffs have filed a meritless suit against NASCAR alleging baseless antitrust claims in order to obtain commercial agreements they previously rejected, and to attempt to extort more favorable contract terms.”
In other words, NASCAR is accusing 23XI and Front Row for filing an antitrust lawsuit only as a response to not successfully receiving the contract terms they sought over the negotiations process. NASCAR has also made legal precedence to Kentucky Speedway v NASCAR, the 2006 case that ultimate concluded the sanctioning body was not a monopoly.
Since then, as 23XI and Front Row points out, NASCAR has purchased the ARCA Racing Series and merged with International Speedway Corporation but the sanctioning body points out the longstanding relationships held by ARCA and ISC even before the merger, while also claiming a statute of limitations.
The two teams say a statute of limitations does not apply because the anti-competitive harm is being applied anew every day.
NASCAR will likely argue in court that there are other Stock Car series for teams to compete in, such as CARS Tour or the ASA STARS Super Late Model Series, while also disputing the premise it is even legally required to have ‘premier teams’ competing in Cup Series events. Â
The Sanctioning Body also argued on December 2 that if it has monopoly power, it would have lowered the revenue it shared with teams and decreased the need to have high quality teams competing in the Cup Series.
“Plaintiffs concede the Charters are “worth millions of dollars” and NASCAR increased the revenues available to teams. … If NASCAR truly had market power, it would be decreasing its demand for Plaintiffs’ services and lowering the amount by which it compensates them,” NASCAR argued.
NASCAR also claims that it cannot be a monopoly if 13 of 15 teams signed the charter agreement extension as the two other teams have asserted.
What is a preliminary injunction?
As part of the lawsuit, the two teams are also asking the court to provide preliminary relief in the form of an injunction. The point of a preliminary injunction is to prevent one party from taking certain actions while a lawsuit is being heard. It maintains the status quo from before the damage was done.
In this case, 23XI and Front Row is asking the court to force NASCAR to recognize the two teams as having charters over the course of the legal process, even though they did not sign the agreement as part of the conviction that the sanctioning body was behaving anti-competitively.
If the court does not force NASCAR to issue what amounts to temporary charter status, 23XI and Front Row will have to race as open teams, those without a charter, which means they are ineligible for guaranteed starting spots in every race and the guaranteed revenue that comes with agreeing to the terms.
For a judge to grant an injunction, the requesting party has to prove that harm is ‘imminent’ and ‘irreparable.’ In other words, if the exact amount of harm can be calculated, that would be covered under judgement should the teams win and thus not eligible for injunctive relief.
If the harm is speculative, and not guaranteed to occur, it is also not eligible for injunctive relief.
NASCAR is asking the court not to grant this relief because one, there is no guarantee that 23XI or Front Row would miss races, just the possibility, and that also the losses are easy to calculate and should be covered under judgement should the teams win the lawsuit.
23XI and Front Row are arguing that harm is both occurring now and irreparable because running as an open team will cause loss of stature within the community. The two teams are also arguing that certain driver and sponsor contracts have opt-out clauses if the team they are signed with do not have charters.
NASCAR again responded that having the option to opt-out doesn’t mean they will, definitively.
In mid-December, the two teams also added a request under the preliminary injunction process for the court to force NASCAR to transfer the one charter each that 23XI and Front Row purchased from the closing Stewart-Haas respectively.
NASCAR says it is refusing to approve the transfer because Stewart-Haas Racing agreed to the terms of the 2025-2031 charter agreement and 23XI and Front Row are attempting to acquire a document that was already agreed to by the previous holder.
The Sanctioning Body says it cannot transfer to charter to teams that has not agreed to the terms unless those two teams also agree.
23XI and Front Row, but also Stewart-Haas, have all argued in court that NASCAR agreed in principal to the transfer and then reneged.
Beyond that, NASCAR also took exception to the timing of 23XI and Front Row adding that request to the docket, arguing that this claim should have been part of the original injunction request or not made at all. NASCAR is asking the court to either strike this request from the record or allow time for the sanctioning body to respond to it.
In theory, all of this has to be sorted out before the end of the year because the 2016-2024 charter agreement expires by the turn of the calendar. At most, this has to be decided before the new season begins because NASCAR, and the teams, need to know whether or not 23XI and Front Row will be recognized as chartered and how many of their cars will be.
Right now, the four existing charters are being held in limbo until the lawsuit has reached a conclusion. The two Stewart-Haas charters are being held in a different kind of limbo and its unclear what NASCAR would choose to do to them if the court does not force the transfer.
SHR, which has downsized to the one-car Haas Factory Team, has argued in court that it ‘does not have the personnel or resources to operate pursuant to the Charters intended to be sold to the Buyers …’
Who is the judge?
The original judge assigned to this case was Frank D. Whitney, who was appointed to the bench in 2006 by George W Bush.
However, the case was reassigned on December 11 to Kenneth D. Bell, a former prosecutor who operated a private practice from 2003 until his appointment by Donald J. Trump in 2019. Bell is a 1983 Wake Forest University law school graduate.
Who are the lawyers?
The two primary attorneys are familiar court room foes.
Representing 23XI and Front Row is Jeffrey Kessler, who is most reputable for representing NCAA athletes in their successful pursuit of earning name, image and likeness rights. He has also represented the US Women’s National Team in their pursuit of equal pay.
NASCAR is represented by Chris Yates, who has represented the United States Soccer Federation, Ultimate Fighting Championship, World Aquatics, Fanatics and the Atlantic Coast Conference.
Where is this headed?
For one, the antitrust lawsuit could take up to two years to complete a trial and judgement. An appeal of that judgement could take even longer yet. There is also, of course, the possibility that the two sides could reach a settlement at any time.
The teams have yet to make particularly clear what they want out of a judgement, if it is decided that NASCAR is acting monopolistic.
What is known, pre-lawsuit, is that the teams wanted permanent charters and not just agreements that run the duration of each broadcast rights agreement. It also wants a larger slice of the figurative revenue pie.
The teams, and especially 23XI Racing due to its affiliation with the Jordan Brand, want NASCAR to have less rights over its intellectual property like branding and identity.
If NASCAR is deemed to be a monopoly, it could be forced to sell some of its track inventory or a rival Stock Car series could be developed to offset the hegemony established by the status quo. Should NASCAR win, would it welcome back 23XI Racing and Front Row under the terms the 13 other teams agreed to? Would those teams even want to come back?
Charter negotiation timeline
What the charter system is
Why it’s a doomsday scenario if a deal is not reached
Teams hired top antitrust lawyer against NASCAR
Jeff Gordon on why the business model needs to change
Michael Jordan says NASCAR will die without charter permanence
Denny Hamlin says teams just want break even revenue
NASCAR’s June offer to teams ‘was worst yet’
Denny Hamlin on why charters need to be permanent
Smaller teams unified with larger teams
NASCAR, teams making progress on charter deal but hurdles remain
Steve Phelps speaks to Kevin Harvick in wide ranging interview
How drivers feel about the state of the negotiations
Hamlin says negotiations will continue until NASCAR is reasonable
23XI, Front Row refuse to sign NASCAR’s final offer
Denny Hamlin defers to 23XI statement
Brad Keselowski said time was right for a deal
Lawsuit timeline
23XI Racing, Front Row decline to sign NASCAR’s final 2025-2031 charter document
Why 23XI, Front Row filed a lawsuit against NASCAR
23XI, Front Row makes his case in antitrust lawsuit against NASCAR
Richard Childress says he had ‘no choice’ but to sign charter document
How drivers feel about the lawsuit
Michael Jordan comments on his team’s lawsuit against NASCAR
Meet NASCAR’s antitrust defense lawyer
NASCAR files injunction to be included in charter system through lawsuit
NASCAR motions against team’s preliminary injunction request
NASCAR, teams consent to redacting charter details in filings
Teams make case for injunctive relief, expedited discovery
NASCAR’s lengthy rebuttal to injunction, lawsuit
Teams respond to NASCAR response over injunction
23XI, Front Row and NASCAR go to court over injunctions
Judge rules against teams preliminary injunction request
Denny Hamlin says 23XI may not race next year
What preliminary injunction denial means for lawsuit
NASCAR drops ‘lawsuit release clause’ in open agreement
Appeal timeline rebuttal filed by NASCAR
Why 23XI may not have to race in the Clash without charters
Teams drop appeal, may re-file in district court
23XI, Front Row re-file injunction request
NASCAR opposes expedited timeline
France, NASCAR motion to dismiss, deny SHR charter transfer request
NASCAR says injunctive request still fails to show irreparable harm
Teams say NASCAR went back on its word over SHR charters