NASCAR says 23XI, Front Row lawsuit undermines its entire charter system

Yesterday at 01:11 PM

NASCAR never asked for a charter system, but ironically, it finds itself defending the business model as it takes on 23XI Racing and Front Row Motorsports.

Chris Yates, the league's lead counsel, made that argument on Wednesday following NASCAR’s filing of a counterclaim against 23XI Racing, Front Row Motorsports, and Curtis Polk. NASCAR alleges that the teams and Polk violated Section 1 of the Sherman Act and conspired against NASCAR in its negotiations of the 2025 Charter Agreement.

"The teams wanted the charter system, and NASCAR went along with that request," Yates said. "NASCAR doesn't need the charter system. Although it believes the charter system has strengthened the sport and benefited racing teams, it doesn't need the charter system. NASCAR obviously operates other series… which do not have guaranteed entry. NASCAR's history, including in the Cup Series, is one in which all teams race for entry into NASCAR races.

"But NASCAR does believe that the most recent charter agreement, which was signed by 13 of 15 race teams representing 32 of 36 charters, is fair, equitable, and gives the teams the three things they wanted most."

Yates laid out those points, which included increased revenue from the new media rights deal. The second was a guaranteed starting position in all Cup Series races, which is what possession of a charter provides. And the final thing was ongoing enterprise value.

NASCAR's counterclaim in the next step in the ongoing battle between the league and 23XI Racing and Front Row Motorsports over the charter agreement. Less than a month after not signing the charter agreement, the teams filed a joint antitrust lawsuit against NASCAR alleging unlawful monopolization.

"From the outset of this lawsuit, you haven't heard us respond publicly other than in court," Yates said. "However, today, we filed our counterclaims that make clear that 23XI and Front Row's lawsuit is an attempt to misuse the judicial system to try to get better terms than the teams that chose to sign the 2025 charter agreement back in September of last year. NASCAR's view is that the charter agreements make the racing teams stronger financially and, most importantly, partners with NASCAR in trying to grow the Cup Series as a sports and entertainment property. And that's important because NASCAR is engaged in intense competition to attract new fans, sponsors, broadcast partners, and other participants in the very competitive motorsports, broader sports and entering mainstream marketplace."

The charter system was implemented before the 2016 season, when 36 teams were given a charter. NASCAR determined who was initially given a charter, focusing on teams that were full-time in the series and had attempted to qualify every week for the previous three years. A race team with a charter is guaranteed a starting spot in the Cup Series field and a portion of the purse money. Charter teams make more money than an Open team.

There is a performance standard with a charter, however, NASCAR has yet to revoke a charter from a team. If a team finishes in the bottom three of the owner standing for three consecutive years, NASCAR has the right to revoke the charter. Teams have the right to sell or lease (for one year) their charter.

NASCAR extended the charter agreement for the first time in 2020. It went through the 2024 season.

Front Row Motorsports was one of the original teams that NASCAR gave charters to. It purchased a third charter last year from Stewart-Haas Racing.

23XI Racing was formed in 2021 and purchased its first charter from Germain Racing. When the team expanded in 2022, the organization bought a charter from StarCom Racing. And last year, 23XI Racing completed a purchase of a charter from Stewart-Haas Racing to expand to a third car.

"The Plaintiffs' lawsuit calls the charters illegal and challenges essential terms of the charters," Yates said. "23XI and Front Row's lawsuit therefore threatens the continuation of the charter system. That is true regardless of who ultimately prevails in the litigation. NASCAR obviously believes it will prevail, but the 23XI and Front Row lawsuit is endangering the continuation of the charter system.

"Let me be very clear: NASCAR is happy to proceed with a charter system and work with any and all teams interested in collaborating to grow the sport. But by seeking a declaration that the 2025 charter agreement is illegal and violates the antitrust laws, 23XI and Front are essentially claiming that the charters are illegal agreements. This opens up Pandora’s box and calls into question whether the charter system can continue."

The counterclaim will proceed on the same timeline as the antitrust lawsuit, which is scheduled for a Dec. 1 trial date. NASCAR is still appealing the preliminary injunction granted to 23XI Racing and Front Row Motorsports that allows them to compete as charter teams this season. The oral arguments for the appeal are scheduled for May.