This week, 23XI Racing and Front Row Motorsports suffered a blow when the Fourth Circuit Court of Appeals ruled against them and in favor of NASCAR. This was after 23XI and FRM were the lone holdouts for the current 7-year charter agreement. The teams wanted better terms such as permanent charters, similar to the NFL’s franchise model. NASCAR’s refusal to bend resulted in 23XI and FRM refusing to sign the charter agreement by the deadline last August. The agreement passed without 23XI and FRM’s involvement, and the teams were subsequently stripped of their charters.
They were restored, however, due to the two teams filing an appeal. But after this week’s ruling, NASCAR has the legal standing to repossess all six charters the two teams hold. These charters are believed to be worth as much as $100,000 each. If this happens, what will be the fallout? Let’s take a look at some of the things that could happen if NASCAR strips 23XI of their charters starting at Dover.
Many drivers’ contracts are linked to the charter itself. Drivers want a guaranteed spot in the starting field every Sunday and the charters themselves can promise this. Without the charters, though, drivers are vulnerable to missing races if more than 40 cars show up. Case and point: at this weekend at Chicago, 41 drivers attempted to qualify for the race. Corey Heim in a fourth 23XI entry was bumped from the field by Kathrine Legge due in part to his open status. Now imagine all 23XI and FRM drivers being in the same boat.
It could also mean lower pay for drivers and team members. NASCAR teams have long said that being a NASCAR race team is not a profitable business. With open teams making only a third of what chartered teams make from the purse money, 23XI and FRM losing their charters could be a financial catastrophe for all involved.
While the details of Bubba Wallace’s, Riley Herbst’s, Tyler Reddick’s, Zane Smith’s, Noah Gragson’s, and Todd Gilliland’s contracts and their salaries are unknown, if their contracts are conditional on whether or not they have a charter under them, they could become free agents. If that happens, 23XI and FRM will have to seek out replacement drivers if they choose to stay open and compete at the same capacity at all.
This would have a ripple effect on NASCAR Silly Season. With only a handful of rides up for grabs, where would all these drivers go should they lose their rides? Or would they renegotiate terms and stay with the team as open cars?
Going hand-in-hand with potential driver losses, sponsorship deals are often also linked to a team’s charter status. Think about it: when a company invests in a team to sponsor one of their cars, they want to see that car out on track. They want to be guaranteed a starting position, not in a situation where their driver is forced to go to the house due to some freak mechanical failure.
If their existing sponsors start withdrawing support, the team’s funding will plummet. With the team earning less money from weekend winnings, cost-cutting will become necessary. Teams might have to result in layoffs and spending less money on research and development. That would lead to the teams possibly downsizing, becoming non-competitive, and potentially even shutting down outright.
While losing their charter status would undoubtedly be a massive loss for 23XI Racing and FRM, it could be a huge win for the teams that did suck it up and sign the less the desirable charter agreement. This would drop the total number of chartered teams down to 30 from its original 36. Chartered teams get a higher percentage of the purse as well as merchandise and TV revenue. With six of the teams out of the equation, this means that NASCAR could potentially redistribute the money with the chartered teams getting a slightly larger piece of the pie.
It would also mean that the value in charters could skyrocket. This is simply due to the fact that there would be less of them. It’s basic economics: fewer supply in tandem with a higher demand leads to increased value in the supply. And, with charters potentially becoming more expensive, it’s less likely that teams such at JR Motorsports would ever go Cup racing full-time.
If NASCAR was intent on keeping 36 charters in the sport, they could hold a charter auction. This would be appealing for new owners, such as, potentially, Dale Earnhardt Jr. and Jimmie Johnson. Dale Jr. has long wanted to move his Xfinity Series team into the Cup Series. The team even fielded an entry in the 2025 Daytona 500 for Justin Allgaier, where they finished 9th. But the steep cost has stopped him up to this point. Jimmie Jonhson, meanwhile, stated last week that he wanted to expand to a three-car operation. Currently, he is in a legal battle with Rick Ware Racing over the alleged purchase of one of their charters. If NASCAR holds an auction for these charters, it could mean them selling at a more affordable price.
Other potential owners could also enter NASCAR if the sanctioning body chooses to go this route.
What do you think about all of this, Daily Downforce readers? Which option do you think is the most likely? Is there something that we didn’t even think of? Let us know your thoughts on this! Join the discussion on Discord or X, and remember to follow us on Instagram, Facebook, and YouTube for more updates.
