23XI Racing Says They Will Shut Down At The End Of The Year If NASCAR Sells Their Charters

The end of the road for MJ’s NASCAR team?

23XI Racing, the NASCAR Cup Series team owned by NBA legend Michael Jordan and Joe Gibbs Racing driver Denny Hamlin, is currently locked in a bitter legal dispute with NASCAR over the sport’s charter agreement after refusing to sign the new agreement last year.

The lawsuit, filed in October by 23XI Racing and one of their fellow NASCAR teams, Front Row Motorsports, came as a result of tense negotiations between NASCAR and team owners over the sport’s charter agreement for 2025 and beyond. A charter gives a team a guaranteed spot in each race, as well as a larger portion of the revenue. Without charters, teams can still compete as “open” teams, but they are not guaranteed a spot in the race and must race their way in during qualifying.

The previous charter agreement expired at the end of 2024, and the team owners pushed throughout the year for an agreement that would provide a greater share of television revenue to the race teams, among other changes that they were seeking to help improve their own financial stability.

Of course NASCAR pushed back on many of the requests by teams, giving them an increased share of the TV revenue but not meeting the number that some team owners (like Hamlin) claim is necessary for teams to simply break even.

And the new agreement presented by NASCAR also reportedly included a non-disparagement clause, preventing the teams from publicly criticizing the sanctioning body, as well as a provision that allowed NASCAR itself to own charters and run their own teams.

There was also a clause in the charter agreement that would prohibit teams from suing NASCAR for antitrust violations.

Eventually NASCAR presented team owners with what they said was their best and final deal, and gave them an ultimatum: Sign it before the playoffs start, or we’ll take your charters.

Well 13 of 15 NASCAR teams decided to just bite the bullet and sign the agreement, although many of them didn’t exactly sound thrilled with the deal they got. But the two that refused to accept NASCAR’s proposal, 23XI and FRM, decided to instead file a lawsuit against the sanctioning body.

The lawsuit accuses NASCAR and CEO Jim France of “unlawful monopolization of premier stock car racing in order to enrich themselves at the expense of the premier stock car racing teams.”

The teams cite NASCAR’s ownership of many of the tracks at which it races, as well as requirements that teams buy their parts from suppliers chosen by NASCAR, as proof that the sanctioning body has a monopoly on the sport of stock car racing.

As part of the lawsuit, the teams asked for a preliminary injunction that would allow them to compete as chartered teams for 2025, something that they wouldn’t have been able to do unless a judge struck the provision in the charter agreement prohibiting teams from filing an antitrust lawsuit against NASCAR.

And competing as a chartered team is a big deal: It’s not only more revenue, but a guaranteed spot in each race, which is important when it comes to signing sponsors and drivers. (In fact, 23XI claims that both Bubba Wallace and Tyler Reddick informed the team that they may seek other options if 23XI couldn’t guarantee them a charter).

Well a district court judge granted 23XI an injunction back in December that required NASCAR to permit the team to run as chartered cars for 2025, citing in part a clause in Reddick’s contract that requires 23XI to provide a chartered car for the driver as well as threats from sponsors to pull out if the team wasn’t chartered.

But NASCAR appealed that ruling, and in June a three judge panel on the appeals court vacated the injunction requiring NASCAR to allow 23XI and Front Row Motorsports to run as chartered teams.

That means that, if NASCAR decided not to allow them to continue on as chartered teams, they would lose not only the money that they would get from running as a chartered team but also the guaranteed starting spot for Bubba Wallace, Tyler Reddick and Riley Herbst for 23XI Racing and Noah Gragson, Todd Gilliland and Zane Smith for FRM.

The teams appealed the ruling, asking for a rehearing in front of the full Court of Appeals. But last month, NASCAR scored yet another legal victory when the court declined to rehear the appeal from the teams:

With the appeals court ruling, NASCAR did indeed revoke the charters of 23XI and FRM, meaning that the teams have been forced to run as open teams for the last month. But they also took steps to change the rulebook to ensure that 23XI and FRM would be guaranteed starting spots in each race (which sounds like something a monopoly would do, change the rules midseason to benefit their own legal case…) and thus far, NASCAR has not done anything with the charters while the teams again ask the court for a temporary restraining order prohibiting NASCAR from selling the charters until the litigation is resolved.

Of course if the charters were sold to another team, and 23XI and FRM ultimately prevail in the litigation, it would be hard to figure out what the damages are: There are only 36 charters, and their value fluctuates depending on how many are up for sale and which teams are in the market for them. Last year, FRM reportedly paid between $20-25 million for a charter that they bought from Stewart-Haas Motorsports. And the year prior, Spire Motorsports (which isn’t involved in the litigation) reportedly paid $40 million for a charter.

We know that there are teams in the market for the charters currently in dispute – because NASCAR told the court today that they want to sell one of them.

In a filing this morning, NASCAR said that they have a buyer, and planned to “convey a Charter for the 2026 Cup Series season” to an undisclosed team.

But 23XI and FRM say that selling their charters would put them out of business.

In their response, the team says that should NASCAR be allowed to give their charters to other teams, it doesn’t matter what happens at trial because they will go out of business either way:

“NASCAR has stated its intent to sell Plaintiffs’ charter slots to other entities before trial, putting 23XI and Front Row Motorsports out of business regardless of what happens at trial.”

Obviously that’s a big risk for the teams: If the court doesn’t issue the restraining order and allows NASCAR to sell the charters before the trial, they plan on shutting down at the end of the 2025 season. And even if the court prohibits NASCAR from transferring the charter until after the trial, if the teams don’t win the lawsuit, chances are they’ll go out of business either way.

It doesn’t seem like there’s any hope for a settlement at this point, so the team’s future – at least right now – is in the hands of the court.

We’ll see what happens.The post 23XI Racing Says They Will Shut Down At The End Of The Year If NASCAR Sells Their Charters first appeared on Whiskey Riff.