400 ‘Monster Miles’, 37 drivers, and thrill at its zenith is what Dover Motor Speedway has brought again on July 20th, as playoff spots and that $1 million prize are at stake. But in the background, something else altogether is playing out with Michael Jordan’s 23XI and Bob Jenkins’ Front Row Motorsports fighting for their very survival in NASCAR. And guess what? This race is as critical as it can get for them.

Most people may now be aware of the antitrust lawsuit filed on October 2, 2024, by 23XI and FRM. It was probably a watershed moment as FRM and 23XI tried to amend the NASCAR charter system. The lawsuit stemmed from the fact that on September 6th last year, NASCAR presented a final take-it-or-leave-it offer to teams, giving teams just midnight to sign it. But 23XI and FRM rejected the deal and cited monopolistic practices. Ever since then, the lawsuit has created hurdles for both 23XI and FRM, leading up to this Dover Race.

What does the court ruling mean for 23XI Racing and Front Row Motorsports?

The court initially granted a temporary injunction to the two teams, which allowed them to race as chartered teams for the 2025 season. Moreover, the injunction also allowed the teams to purchase additional charters if they wanted to from Stewart-Haas Racing. However, on March 5th this year, NASCAR came up with their loaded counterclaim and dampened all the reliefs granted by the injunction.

NASCAR accused 23XI’s co-owner, Curtis Polk, of “orchestrating and threatening a boycott of one of the qualifying races,” and called the teams’ actions akin to an “illegal cartel.” The hopes of the two teams were even more dampened when Judge Bell denied dismissing NASCAR’s motion, and then came a major ruling by an appeals court on June 5th, which turned all the tides towards NASCAR.

The appeals court ruled in favor of NASCAR and overturned the injunction initially granted to 23XI and FRM. The crucial part of the decision was the argument that the two teams themselves were using the charter system, which they were opposing in the lawsuit. This means that the six cars from the two teams are entered as ‘open entries’ in the race, and that has wider ramifications.

How does NASCAR’s open team status impact 23XI Racing and Front Row Motorsports?

The major loss for the two teams would be financial, as they are set to lose millions per year as open teams. As open teams, both 23XI and FRM will only earn performance-based payments and won’t earn NASCAR’s purse and points fund money. Moreover, they might also have to repay the revenue earned when they were racing as charter teams, making things even more complicated for them.

On top of this, with a revenue drop of almost 60-70% per race, there is also a real possibility of the teams losing their existing sponsorships and even their top drivers. Take, for example, 23 XI’s sponsors like McDonald’s and DoorDash, who would want stability in their financial investment and wouldn’t bear losing almost $10 to $30 million.

What is at stake for drivers like Bubba Wallace, Tyler Reddick, and rising stars like Noah Gragson and Zane Smith?

Drivers like Tyler Reddick can also seek pastures anew as he already has a contract clause allowing him to leave if not provided a charter car. Losing Reddick would be calamitous for 23XI as he is a top driver and is currently fifth in points. So, if Reddick decided to move elsewhere, he could easily command a contract worth $5million to $10 million annually.

Other drivers like Bubba Wallace, who is also a high-profile driver, have their income tied to being visible and earning sponsorships. So, if 23XI tanks, then the guy could also decide to move and earn significantly more elsewhere. As for other drivers like Noah Gragson and Zane Smith, they are rising in the rankings and currently command a salary ranging from $500,000 to $1 million, and any team would benefit from having them, considering their strong performances and future potential. Moreover, if FRM were made to repay the charter revenue, the teams could even go into insolvency, making salary payments quite difficult.

How could this legal battle reshape the future of NASCAR ownership?

Of course, it’s possible that the legal battle could play out in several ways, which also includes sweeping changes coming to NASCAR. Take, for example, NASCAR ownership, which is owned by the France family as a private entity with significant control over major things. So, a successful lawsuit can force NASCAR into decentralization of power, giving teams more autonomy and making it like other professional sports leagues like the NFL.

Curtis Polk also highlighted a similar thing. “We come from a different world of sports where, if you want to meet with the commissioner, the commissioner is going to meet with you. In other sports, the commissioner basically works for the teams and the team owners. This is totally 180 degrees different.” So, is the reformation of the charter system a possibility?

The lawsuit’s main argument is NASCAR’s power to revoke the charters and the temporary nature of the agreements. For instance, the latest agreement is set to expire in 2031. So it’s possible we could see a permanent nature of charters and may force a fairer split of the revenue. For instance, NASCAR’s $1.1 billion media deal is huge, and teams could earn more of a chunk of the revenue.

“Teams have borne the brunt of increasing costs in recent years as NASCAR introduced a new car in 2022 that included spec parts from NASCAR-approved suppliers. They want a greater share of revenue. NASCAR’s tracks — many of them owned by NASCAR itself — receive just over half of the media rights revenue, while NASCAR gets 10% and teams get the revenue,” reported Nick Bromberg of Yahoo Sports. So, for the time being, what’s next for the two teams while they battle the lawsuit?

What comes next for 23XI Racing and Front Row Motorsports?

It’s entirely possible that NASCAR and the two teams could agree to settle and take the matter out of court. NASCAR has even made repeated proposals for the same, while the teams have prioritized the lawsuits. But while the lawsuit is going on, will racing as open teams be a viable option for 23XI and FRM?

The Dover race might not be a challenge for the two teams as all the participating teams will qualify due to enough spots. The tricky part will come when they face oversubscribed races, making speed qualifying essential in each of those races. “Our business model is going to move forward, and we are going to continue to grow and compete at the highest level,” said Curtis Polk amid the uncertainty of the two teams.

All in all, even leasing charters is off the table for 23XI and FRM, as NASCAR has repeatedly stated the charter agreement is “off the table” for the two teams. So, this leaves participating as open teams being the only viable option, and then hoping for some relief in their legal battle.