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As the FRM/23XI lawsuit continues to unfold, many fans are asking both “why more teams hold out” and “what would have happened if more teams held out.” While these are valid questions, this issue is very complex due to how the Charter System is set up.
The NASCAR Charter System was introduced in 2016. The 36 charter system allows teams automatic entry into every NASCAR race per charter. However, teams can race without a charter. Running without a charter is costly for a team, as those charters also give teams money via revenue sharing with NASCAR and its tracks.
This financial aspect is why more teams did not hold out. When 23XI and FRM held out on signing NASCAR’s final offer, most expected they would lose their charters. Losing charters and, in turn, the money tied to their charters was the fear of most teams at the negotiating table.
The Charter System is not permanent, and that is a key factor in this problem. In theory, NASCAR could have not offered teams a new agreement from the start of negotiations. If teams lost their charters, they would have no way to make the millions of dollars they spent on those charters back.
This creates a tough spot for the teams. However, they have agreed to these terms in the past. Nonetheless, for the 2025 negotiations, the teams knew what they wanted, so they carried out the talks for some time. This disagreement with NASCAR culminated on Sept 6. when NASCAR sent teams their final offer.
According to the lawsuit between NASCAR and 23XI/FRM, the end of negotiations were swift. NASCAR allegedly sent this final offer late that afternoon with a short one-hour deadline to sign and return it.
Per page 29 of the lawsuit:
“On September 6, 2024, NASCAR executed its monopsony power to full effect. It sent what it declared to be the final version of the 2025 Charter Agreement to all of the racing teams at approximately 5:00 p.m. and told the teams they had a 6:00 p.m. deadline to sign the more than 100-page Agreement or risk losing their charters.”
In letters between NASCAR and 23XI, NASCAR apparently did give a warning that they were sending this offer. If this excerpt is to be believed, teams had to of felt pressured to sign fast or lose it all.
This makes it difficult for teams to decide whether to sign or hold out. Furthermore, according to the lawsuit, NASCAR allegedly offered an extension, but with one dramatic forewarning.
Page 29 of the lawsuit explains this as well:
“After initial outrage from the teams, Jim France and other members of NASCAR’s senior leadership started calling teams to tell them NASCAR would extend the signing deadline to midnight, but it would eliminate the charter system altogether for 2025 and beyond if a substantial number of teams did not sign by that deadline.”
If this is true, this makes 23XI and FRM’s holdout all the more daring, and why the 13 other teams signed understandable. While some owners have stated that they were okay with signing, others privately compared NASCAR to a communist regime.
According to the accounts of Sept. 6, it was not as simple as holding out and waiting but rather an all-or-nothing situation. Those 15 teams who signed held their nose and signed, while the two who didn’t have a rocky, uncertain future ahead.
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