Appeals Court Clears The Way For NASCAR To Revoke 23XI Racing’s Charters

Are things about to get a lot harder 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 last month 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 decides 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 today, NASCAR scored yet another legal victory when the court declined to rehear the appeal from the teams:

The ruling means that NASCAR could choose to revoke the charters from the teams after 7 days, which means the teams are safe this weekend at Sonoma but could be forced to run as open teams as soon as the race at Dover next weekend.

Losing a guaranteed starting spot is obviously a huge deal for these teams. If a driver has a bad run in qualifying, or something goes wrong with the car and the team isn’t able to get a qualifying run in, that means the team would miss the race, losing not only the money that comes from it but also the championship points.

NASCAR hasn’t indicated whether they will, in fact, revoke the charters from 23XI and FRM or what would happen to those charters if they are taken from the teams. Would they hit the open market for other teams to snatch up? Or would NASCAR hold them pending the trial, which is currently scheduled for December 1?

The attorney for the teams, Jeffrey Kessler, released a statement following the ruling from the appeals court:

“We are disappointed by the Fourth Circuit Court of Appeals decision to deny our request for a full rehearing. This decision has no bearing on the strength of our antitrust case, which we look forward to presenting at trial. We are committed to racing this season as we continue to fight for more competitive and fair terms for all teams to ensure the future of the sport, and remain fully confident in our case.”

While the teams are vowing to continue racing regardless of whether they have charters or not, there’s no doubt that today’s ruling puts way more pressure on the them to bring this dispute to a quick resolution and possibly reach a settlement with NASCAR.The post Appeals Court Clears The Way For NASCAR To Revoke 23XI Racing’s Charters first appeared on Whiskey Riff.