What’s Happening?

Today, the United States Court of Appeals for the Fourth Circuit ruled in favor of NASCAR, overturning a Dec. 18 ruling on two NASCAR Cup Series teams’ charter status throughout their ongoing lawsuit with the sports governing body. This loss is a major blow for both teams, both in the courtroom and in the garage area.

Here’s everything you need to know about what this means for 23XI Racing and Front Row Motorsports.

What Got Overturned?

It’s a long road to understand how we got where we are now, so here’s an abbreviated look at this small branch of the larger lawsuit between the two parties.

This saga began on Oct. 2, when 23XI and FRM filed an antitrust lawsuit against NASCAR. Both teams had also held out on signing the 2025 NASCAR Charter Agreement, meaning that they would lose their charters at the end of the year. However, the two teams had a plan in place to fix this problem.

Their legal team filed a preliminary injunction on Oct. 9 to compete as charter teams for the duration of the lawsuit. The two were not initially rewarded with their preliminary injunction motion via ruling on Nov. 8. However, the teams dropped their initial preliminary injunction on Nov. 20 and filed a new one on Nov. 27.

On Dec. 18, the teams were granted their preliminary injunction, meaning that NASCAR would have to treat the two as charter-owning teams, alongside others they had agreed to purchase during the 2024 season. 

Most expected NASCAR to appeal, with the hearing happening on May 9. After this hearing, in which 23XI and FRM’s legal team faced massive pushback from judges, the ruling, released Thursday morning, showed that the judges had sided with NASCAR.

This means that the preliminary injunction was no longer in place, and the teams will likely lose their charter status, pending the opportunity to petition for a rehearing. At the risk of losing their charters again, let’s review what losing them means for 23XI and FRM.

Understanding a NASCAR Charter

To understand what 23XI Racing and Front Row Motorsports are losing, you need to understand what charter ownership means for a NASCAR Cup Series team.

Introduced in 2016, the Charter System granted 36 charters to teams who ran full-time from 2013 to 2015. As of the fall of 2024, each team is allowed to own a maximum of three charters, with teams that already owned four charters (prior to last fall) grandfathered in at their current size.

A charter acts almost like a league franchise, such as those found in the MLB or the NBA. However, the system differs from other major sports leagues in that it is not permanent. Should NASCAR decide to do so, it could end the system, something they have hinted at throughout this lawsuit.

Each charter is applicable to one car and provides that car with automatic entry into the NASCAR Cup Series, points races, and payouts via revenue sharing from NASCAR’s media rights deal. If a team were to close-up shop or leave the sport, they can sell their charter or lease it for one year to another team. For example, RFK Racing and Rick Ware Racing are currently in a lease agreement.

Perhaps the most crucial development in NASCAR charter ownership since 2016 is the inherent value carried by a charter. The value of each charter has risen significantly since the start, with a recent report suggesting that Legacy Motor Club agreed to buy a charter from Rick Ware Racing for a record-breaking $45 million. This value gives teams something of high value (beyond equipment and tools) to sell should they close their operations.

What is Not Affected by This Ruling?

The loss of Charters does not mean the teams are barred from racing in NASCAR. Both teams signed the Open Agreement on Nov. 16. This means they will race, just without the benefits other Charter Teams have.

Furthermore, the teams will continue their chase for the title without interference, as this does not affect their points or standing.

Finally, the latest ruling will come into effect seven days after the ongoing 14-day period in which the two teams have to petition for a rehearing. This means that the two teams will be chartered at least for this weekend, and even perhaps next weekend.

What Does This Mean for 23XI and FRM Directly?

After reviewing the basics, it’s easy to understand what 23XI and FRM will lose should this ruling remain untouched. Without these charters, the teams lose out on revenue sharing and automatic starting positions. However, the loss of charter status will likely have some underlying effects.

At face value, it’s going to cost more to operate now as the teams are no longer getting the hefty amount of money from NASCAR.

Big lawsuit news, a significant win for NASCAR.

23XI and FRM racing as open teams will strain them financially and could possibly threaten some of their sponsor/driver contracts as the year goes on. https://t.co/StMCCmjuNi

— Eric Estepp (@EricEstepp17) June 5, 2025

But, in the long run, both teams will lose the money they invested in buying these charters. 23XI purchased its first charter from the shuttered Germain Racing after the 2020 season and its second from StarCom Racing after the 2021 season. Front Row Motorsports has owned the charter used for its No. 34 car since the start of the charter program and purchased the charter now used by the No. 38 in 2016.

But in an even more striking blow, the teams are also losing the two new charters that they acquired from the shuttered Stewart-Haas Racing operation, which sold off three charters last season. They were granted these charters via the same Dec. 18 preliminary injunction ruling.

But most importantly, another angle that arose after the teams were not granted their first preliminary injunction in November is back on the table. In the second injunction, filed by the teams on Nov. 20, both plaintiffs claimed that key drivers and sponsors had inquired about leaving should they not obtain charter status.

Looking past the top-soil issues such as revenue sharing and automatic entry, the teams’ lack of charter status results in them losing their drivers and sponsors, the organizations would be crippled.

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