The charter system, introduced in 2016 as NASCAR’s answer to franchise stability, has now become the flashpoint for 23XI Racing and Front Row Motorsports. When all teams but these two signed new charter extensions in September 2024, the holdouts triggered a high-stakes legal battle. This ongoing disagreement, which culminated in an antitrust lawsuit filed against NASCAR and its CEO Jim France, stemmed from years of failed negotiations where teams sought a more equitable revenue split and a permanent, more valuable charter system, contrasting with NASCAR’s current 7-year charter agreements.

The past few months have seen a rapid succession of critical legal maneuvers, dramatically escalating the stakes for the involved teams. As Michael Jordan’s team famously stood its ground, NASCAR countersued in March, branding the owners as part of an ‘illegal cartel’ intent on disrupting its revenue-share. In mid-July, the teams filed urgent motions seeking a temporary restraining order and preliminary injunction to preserve their charter status before Dover weekend. Meanwhile, the Fourth Circuit’s denial of rehearing last week put their chartered future in jeopardy and added urgency to this climactic showdown. But this winter-into-summer legal saga has taken a sharp turn once again with NASCAR showing ‘no mercy.’

Inside the lawsuit shaking up the Cup Series

NASCAR has issued its most pointed and damning legal response in the ongoing courtroom clash, accusing both teams of crossing ethical boundaries to maintain charter status in the Cup Series. In newly filed court documents dated July 16, NASCAR states that the teams’ latest attempt to secure a temporary restraining order has “no logical basis,” and further alleged, “Plaintiffs manufactured evidence of harm to support their second [preliminary injunction] motion, and misled the Court in declarations.” This is the third such attempt by the two Cup teams to use legal action to continue racing as chartered entries after refusing to sign NASCAR’s renewed charter agreement. While the court is still reviewing the request, this moment could reshape the sport’s power dynamics and credibility.

At the core of NASCAR’s argument is a forceful rebuttal to what it now suggests was intentional deceit on the part of the plaintiffs. The sanctioning body pointed to past filings by 23XI and FRM that were instrumental in the court granting them the right to race with charters earlier this year. NASCAR now argues, “Discovery has revealed that evidence Plaintiffs submitted to the Court in connection with their second [preliminary injunction] motion was manufactured.” This statement implies a deliberate effort to mislead a federal court and casts a new doubt on the entire basis of the lawsuit. NASCAR also added, “declarations submitted under penalty of perjury suggesting that Plaintiffs had no involvement in the creation of that evidence were false,” a claim that significantly raises the legal and reputational stakes for both teams.

For 23XI, co-owned by Denny Hamlin and Michael Jordan, and FRM, the consequences of losing charter status are more than symbolic. Without it, they lose guaranteed race entries, financial stability through NASCAR’s revenue-sharing model, and the contractual security to retain sponsors and drivers. “They once again will face the prospect of losing key sponsors and star drivers,” the teams argued in their Monday filing, “who will have the right to terminate their contracts and have already signaled their intention to pursue driving opportunities with other teams.” These dire projections underline what the teams claim is “irreparable harm” should they continue as open entries. This claim has been aggressively refuted by NASCAR on legal and factual grounds.

While the lawsuit is scheduled for trial in December, the urgency comes from the fact that this Sunday’s race at the Dover International Speedway would be the first time 23XI and FRM compete without a charter, pending the court’s decision. Despite the limited entry list this weekend, with only 37 cars for 40 spots, the symbolic fallout of appearing as open teams could accelerate the very sponsorship erosion they fear. NASCAR, for its part, says the plaintiffs do not even have a valid claim to the charters in question. “Although based on the false premise that Plaintiffs have Charters,” NASCAR wrote, “and notwithstanding the substantial interest in Charters from motorsports companies racing in INDYCAR, Xfinity, and other series, NASCAR has represented it will not sell any Charters before the Court can rule on Plaintiffs’ motion for preliminary injunction.”

Perhaps the most notable tension emerged through a revelation involving Michael Jordan himself. NASCAR cited deposition testimony from Jordan, where he affirmed the team’s intent to finish the season regardless of charter status, noting, “Jordan conditioned 23XI’s long-term participation in NASCAR on the implementation of a permanent Charter system.” This statement distills the broader conflict at hand, regarding the permanence, power, and future leverage teams have within the NASCAR structure. The current charter agreements texted only through 2031, tied to the media rights cycle, with an optional 7-year extension.

The legal war being waged is as much about today’s race grid as it is about a long-term vision that may determine whether teams like 23XI and owners like Jordan stay in the sport at all.

Tony Stewart’s exit may pave the way for a charter resolution.

With Stewart-Haas Racing (SHR) ceasing operations after 2024, 23XI and FRM quickly moved to secure charters from Tony Stewart. While financial agreements were reached, the legal standoff between the teams and NASCAR stalled approval of the transactions. But according to a tweet from FOX Sport’s Bob Pockrass, the deal may now be close: “Teams attorney Jeffrey Kessler said he expects the purchases of charters from SHR to go forward.”

Rile Herbst, currently part of SHR’s Xfinity lineup, has been strongly linked to a Cup ride at 23XI. Meanwhile, FRM owner Bob Jenkins reportedly purchased one of the SHR charters for $20-25 million in May, already locking in Todd Gilliland and Noah Gragson for next year. Kessler, who is leading the antitrust lawsuit against NASCAR, remains optimistic: “We made our case that we’re right on the facts, we’re right on the law, and hopefully the judge will agree.”

Tony Stewart, reflecting on his departure, offered a blunt rationale. “You look at what’s going on with 23XI and Front Row Motorsports right now, with their battle with NASCAR and the direction that things are going. It’s not a direction that I want to be a part of,” he said. “This was never a part of a master plan, but… this has become very clear that this is the right time for me to get out of the sport.” 

With Stewart stepping away, NASAR may be finally forced to decide whether to uphold its stance or greenlight the charter transfer, shaping the 2025 grid and the broader balance of power.