Appeals Court Sides With NASCAR In Antitrust Lawsuit, Rules That 23XI Racing No Longer Has To Be Treated As Charter Team

Well this changes things…

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 today 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.

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.

The teams have 14 days to appeal the ruling and ask for a hearing in front of the full Court of Appeals, and the earliest the judgment would take effect is 7 days after that deadline. So the ruling won’t have any impact on the upcoming races at Michigan, Mexico City or Pocono. But after that, if NASCAR chooses to cancel the team’s chartered status, it would obviously put the teams in a tough spot.

Obviously the teams will appeal the court’s ruling and likely ask that the case be heard by a full panel of the appeals court. They could also ask for a stay of the court’s ruling until it has a chance to appeal to the United States Supreme Court.

But there’s no doubt that today’s ruling puts way more pressure on the teams to bring this dispute to a quick resolution.The post Appeals Court Sides With NASCAR In Antitrust Lawsuit, Rules That 23XI Racing No Longer Has To Be Treated As Charter Team first appeared on Whiskey Riff.