NASCAR Fights Michael Jordan-Led 23XI Racing Over Charter Dispute, Calls Lawsuit an Attempt to Secure an Exclusive Advantage

NASCAR has entered a new chapter in its ongoing legal battle with 23XI Racing, co-owned by basketball legend Michael Jordan and NASCAR veteran Denny Hamlin, along with Front Row Motorsports, owned by Bob Jenkins. The sanctioning body claims the antitrust lawsuit filed by the two teams is an attempt to force NASCAR to grant them permanent charters—essentially franchise rights—that no other teams currently hold.

In a 34-page court filing submitted late Monday, NASCAR argued that neither 23XI Racing nor Front Row Motorsports has suffered any harm by competing as “open” entries. The sanctioning body also revealed that it has potential buyers lined up for the six charters that were temporarily set aside as a federal judge decides whether the teams can reclaim them for the remaining 11 races of the 2025 season. NASCAR indicated it is ready to allocate these charters elsewhere immediately if the court allows.

Charters in NASCAR function like franchise rights, guaranteeing starting spots and a larger share of financial payouts. The dispute began when 23XI and Front Row were the only teams among 15 not to sign extensions on new charter agreements during more than two years of negotiations. NASCAR’s final offer included a seven-year extension with an additional seven-year option, which the teams refused. The two organizations initially won a temporary injunction recognizing them as chartered teams, but that injunction was later overturned, and the teams appealed.

The legal battle is now scheduled to be argued before U.S. District Judge Kenneth Bell on August 28, with the outcome potentially affecting charter allocation for the rest of the season. NASCAR also requested in its filing that 23XI and Front Row return all money they received when they were temporarily recognized as chartered teams, stating that those funds would be redistributed among the 30 current chartered teams.

NASCAR argued that the two teams’ decision not to sign the extensions effectively eliminated their rights to charters. “Mr. Jordan has said he wants to use the litigation to grant him a permanent charter that no other team has,” NASCAR alleged. The sanctioning body maintained that it cannot be forced into a partnership with teams it does not wish to do business with.

The filing also highlighted that 23XI and Front Row have not been harmed by their loss of chartered status. Rule changes in July ensured that their cars are still eligible to compete in races, while contract clauses protect drivers like Tyler Reddick from being penalized if the team is not chartered. NASCAR emphasized that the teams continue to have strong lineups and competitive drivers, undermining claims of financial or competitive damage.

Additionally, NASCAR pointed to its payout structure as evidence that it is not operating as a monopoly. The organization noted that it pays teams a higher percentage of profits than Formula 1, highlighting increases of 28% in the 2016 charter agreement and 62% in the 2025 agreement. NASCAR argued that these financial terms were among the most significant gains for teams, countering claims by 23XI and Front Row that they were disadvantaged.

“NASCAR pays teams more than even Formula 1 as a percentage of profit,” the filing stated. “Plaintiffs ignore the pay raises the teams received. Instead, they focus on a text during negotiations for the 2025 charter that referenced a draft showing ‘zero wins’ for teams. The actual May 2024 draft, however, carried forward major financial gains and provided charter holders with options for investor funding and improved terms.”

While 23XI Racing and Front Row Motorsports continue to operate as open teams, they maintain that they will race regardless of charter status. The lawsuit, however, centers on the teams’ desire for permanent charter recognition, which would guarantee long-term financial benefits and security in NASCAR’s competitive structure.

As the legal battle moves forward, the case is expected to set important precedent regarding NASCAR’s charter system and the rights of teams in the sport. At its core, the dispute highlights the tension between NASCAR’s desire to maintain control over its competitive framework and the ambitions of high-profile team owners like Michael Jordan and Denny Hamlin seeking equity and permanence within the series.

The August 28 court hearing will likely determine whether 23XI and Front Row can regain temporary charter rights for the remainder of the 2025 season, or if NASCAR can move forward with selling and reallocating charters to other teams. Until then, the teams will continue to compete as open entries, protected by recent rule changes but without the guaranteed financial benefits enjoyed by chartered organizations.

The case has drawn attention not only for the star power involved but also for the larger questions it raises about fairness, franchise rights, and the balance of power between a private sports organization and its teams. NASCAR’s argument is clear: the lawsuit is a strategic move by a few teams to secure advantages that no other team has, while the sanctioning body maintains that it is fully within its rights to manage and redistribute charters as it sees fit.

The outcome could reshape the landscape of NASCAR team operations for years to come, as the sport continues to navigate its complex system of charters, payouts, and competitive balance.