Is NASCAR being biased toward some teams? That’s the inevitable question that some Cup team owners would have after an update indicates that the stock car organization might restrict charter numbers per team to three. With news of a team like Stewart-Haas Racing, with even two Cup Championships in its track record, facing an unfortunate demise at the end of the 2024 season, owners are already concerned and this latest news could give them a few sleepless nights.

The new charter agreement could see Joe Gibbs Racing and HMS possibly keeping their 4-charter system as per the grandfather clause. Responding to this, NASCAR’s most vocal critic Denny Hamlin couldn’t help but dissect what it would mean for newcomers like 23XI Racing. And let’s just tell you the odds are definitely not in his favor!

An unfair advantage for Rick Hendrick and Joe Gibbs?

According to The Athletic’s Jordan Bianchi, the proposed new charter agreement would limit teams to owning three charters which could hamper the progress of other teams. It’s no secret that NASCAR is a sport all about teamwork. From having the perfect pit crew to hiring capable engineers, the cost of running a full-time Cup Series venture is through the roof. Still, racing works just like any other business. The more you invest, the more you have chances of success. And for teams like HMS and JGR, this statement couldn’t be truer.

With four charters and some of the greatest names in American Motorsport, the two teams have arguably been the most dominant ever to grace the Cup Series. And this has also been evident in the current season where the duo have picked up majority of race wins till now, with 13 Victory Lanes in the last 16 points races. While the end goal for new teams like 23XI Racing, Trackhouse Racing, and Spire Motorsports is to compete with JGR and HMS, Denny Hamlin believes this dream may not be achievable with a three-charter limitation.

The 23XI team owner further elaborated on this and pointed out a concerning inequality set to plague him on Actions Detrimental. “What’s going to happen then is if you cap it at three, and say, ‘That’s all you can do, 23XI, you can only be three for the rest of your lives’, I’m gonna say ‘Okay, how am I gonna beat Joe Gibbs and Hendrick then?’ I mean, it’ll be tough, especially if they’re trying to put some salary cap or something into this thing. You’re gonna have more resources. I don’t know if I would necessarily agree with that, for sure.” 

Furthermore, not pointing any fingers toward NASCAR’s top executives directly, he shared the downfalls of charter limitations. “I think this is part of a grander plan from Jim France and what he wants. The problem is, you’ve already got four teams. So if you limit to three in the future, it would always be an advantage to have four. If Stewart-Haas goes away, how many four-car teams are there left?” Hamlin revealed.

Currently, only HMS, JGR and the soon-to-be-defunct SHR enjoy four full-time seats. Now with Tony Stewart’s brainchild out of the equation soon, it’s almost like Hamlin is pointing toward an unfair advantage that multimillion dollar-worth racing moguls Rick Hendrick and Joe Gibbs will enjoy. So, the question that arises is how will smaller teams with limited budgets, like Spire Motorsports (three full-time entries), or JTG Daugherty Racing(one full-time entry), or Kaulig Racing (one full-time entry), among others, fare in comparison to the big names?

According to Hamlin, this would create a major discrepancy for smaller teams that can never hope to own four charters, if the rumors of NASCAR’s restriction are true. He stated, “Aren’t those (HMS & JGR) the two most dominant teams? So how does a smaller team with fewer chances to win have an equal opportunity?” Currently, teams like Trackhouse and Spire both would be the worst affected by this charter restriction. The fact that Trackhouse also has four potential full-time Cup drivers could spell trouble for them.

There are also reports that in the latest charter agreement NASCAR have a proposal that would see it offer seven-year charters instead of a permanent one for the teams. Talks over a new charter agreement have stalled, with the current agreement set to expire at the end of the season. Reports indicate that Cup teams want an extra share of the media revenue from the $1.1 billion annual media rights deal, which will run from 2025-2031. However, the current chairman Jim France, whose family owns the organization, appears reluctant. The issue of lesser revenue share is something even Michael Jordan, who owns 23XI alongside Hamlin, raised earlier this year.

Jordan said, “In all partnerships, if you grow the pie, that means your business is going to continue to grow. And to grow the pie, you’ve got to make sure everybody’s healthy within the partnership. If our ownership in NASCAR is losing money and NASCAR’s the only one making money, that’s not a good partnership.” Clearly, the latest update around limiting charters is further bad news for the likes of 23XI, who have the chances to expand their team and generate more revenue.

Ultimately, this also makes Denny Hamlin believe smaller teams cannot keep up with the four-charter teams in the long run because of the difference in resources and manpower.

Hamlin dissects JGR’s role in 23XI Racing’s success to prove a point

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Whenever a new team joins NASCAR, it’s no secret that a lot of time and effort goes into reaching the competitive stage. That being said, 23XI Racing has managed to be successful right from the get-go. Winning their first-ever race with Wallace (Talladega 2020) in the same year they were established, Hamlin’s team has certainly hacked the recipe for success. But this is where Denny Hamlin feels the involvement of bigger teams is fundamental.

If the rumors of the three-charter restriction were true, it would leave only JGR and HMS out in front. When we look at how 23XI Racing utilized JGR’s presence to its advantage, the need for more four-charter teams becomes evident for the growth of the sport. Hamlin shared, “The point of entry into the sport will be extremely extremely hard because we have an alliance with Joe Gibbs Racing that made it easier for us to come in.”

When 23XI Racing entered the Cup Series, they opted to pay JGR a ‘big fee’ to have access to their data points. With the knowledge of a race-winning Cup team to utilize, 23XI was able to develop rapidly. This was a major factor behind their early success.

According to Hamlin, if new teams weren’t getting the support of established four-charter teams, getting development right would be next to impossible in a short period. He added, “I think they (JGR) manufacture about two hundred parts and pieces that help put that car together, that we cannot manufacture because we don’t have the equipment to manufacture it.”

In case there are no newer four-charter teams, the number of teams that can help out smaller ones will stay stagnant. This would mean the barrier to entry for smaller teams will be even higher. Hamlin concluded, “So what I’m saying is you need these big teams to help service the smaller teams, but it will always be an advantage to be a bigger team. I cannot figure out how it would be a disadvantage.”

Will the scenario change or is NASCAR actually going to go ahead with its new charter policy? In case it does, we may hear more from Hamlin and probably others in the coming days.