Series organisers and teams have been locked in negotiations for over two years. Now, more than six months on from the original hard deadline for an agreement to be reached, the deadlock has finally been broken.
In February, the teams allowed an extension to the original hard deadline to expire, unanimously agreeing this position to highlight their discontent.
According to Fox Sports, teams were told they could risk losing their charters for the 2025 season if they didn’t sign the latest proposal on Friday night. This has appeared to convince most teams to fold, but 23XI Racing and Front Row Motorsports have stayed strong to the original position.
’23XI decided to not meet a Nascar-imposed deadline last night to sign charter agreements for its two cars for 2025-2031,’ a 23XI Racing statement read.
’23XI’s position, as stated in a letter to Nascar, is that we did not have an opportunity to fairly bargain for a new charter contract.
‘We notified Nascar what issues needed to be addressed, in writing, at the deadline. We are interested in engaging in constructive discussions with Nascar to address these issues and move forward in a way that comes to a fair resolution, while strengthening the sport we all love.
‘At 23XI Racing, we remain committed to competing at the highest level while also standing firm in our belief that Nascar should be governed by fair and equitable practices.’
Charters were introduced for the first time in 2016, with that original agreement being extended until the end of this season in 2020. The idea was to create stability in the teams and encourage increased business certainty.
Simply put, the charter system guarantees entry to each race and, therefore, a portion of the purse. Through owning a charter, the value of the team increases beyond its physical assets as prospective sponsors are able to evaluate the long-term benefits of investing.
As part of the current agreement, teams receive around 39 per cent of the broadcast contract, which includes the race purse payouts. Overall, 51 per cent goes to Nascar and ten per cent goes to the tracks.
Curtis Polk, who has an interest in 23XI and has been Michael Jordan’s long-time business manager, spoke to reporters at Atlanta Motor Speedway in the wake of 23XI Racing’s refusal to sign the contract.
“Nascar has consistently refused to deal with 23XI in these negotiations,” said Polk, as reported by Fox Sports. “We are David facing Goliath, Nascar has superior bargaining power and undue influence over the sport and the charter process.
“They wielded this power continuously over the past few months and consistently rejecting broad team requests on major issues while providing minor changes for pet issues that some teams requested in one-on-one meetings.”
Neither Nascar president Steve Phelps nor Front Row Motorsports owner Bob Jenkins have made a public statement on the developments at the time of writing.
Front Row Motorsports’ decision to not sign is particularly pertinent as the team announced its intention to purchase one of the four charters being vacated by Stewart-Haas Racing at the end of this season.
“We understand that some teams may have felt pressured and compelled to sign the agreement under significant duress,” Polk continued.
“While other teams may have signed the charter agreement, 23XI Racing faces our own challenges that make these terms particularly harmful to our operations and our ownership groups, interests and intellectual property rights.
“This isn’t the 1960s and these predatory practices will not withstand scrutiny and be accepted in 2024.”
There are 36 charters in Nascar and those who compete in the series without one earn less than a third of what a charter teams makes for competing in a race. A Cup Series race has a limit of 40 cars, so there are four spots available for these ‘open’ cars.
It is unclear what will happen if the current charters are allowed to expire, as the teams would still be able to race. But, this would come with severe financial cost.
Now that the majority of teams have signed, it’s also unlikely that Nascar executives will allow for concessions for the two outstanding organisations.
But, crucially, 23XI Racing count Michael Jordan as one of their co-owners, which brings considerable weight to their decision to not sign.
Nascar won’t want to risk losing the sporting icon, which gives the team a certain level of bargaining power in this situation. Plus, with the Nascar postseason in full swing, executives will not want off-track politics to overshadow the end of the campaign.
