The 23XI racing team, owned by NBA legend Michael Jordan and NASCAR veteran Denny Hamlin, has been at the forefront of the recent charter debate. The team is asking for a higher cut in the revenue split, a permanent charter to ensure stability, a seat at the table for governance issues, and a cut on business deals NASCAR does that uses team or driver likenesses (Like the Netflix docu-series they made). However, NASCAR did not heed all the demands and hence 23XI refused to sign the new charter.

In a letter to NASCAR, 23XI said its Toyota organization was refusing to sign the extension. This letter was sent before starting the playoffs and they have still been adamant about it. All 13 teams except for two teams have refused to sign the new charter, Joining 23XI in opposing the charter is Front Row Motorsports. However, NASCAR has not yet revealed the consequences of not signing. However, a NASCAR insider dwells on the possibilities.

Possible consequences of not signing the charter deal

23XI in their refusal statement said, “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.”

On the other hand, Curtis Polk, MJ’s business manager, has hit out at NASCAR, accusing them of predatory practices. He had previously said, “We are David facing Goliath, Nascar has superior bargaining power and undue influence over the sport and the charter process.” After all other teams have signed the charter deal, it is unlikely that NASCAR will barge to incorporate the demands put forth by just two teams. The question remains: what consequences will the teams face for refusing? While no official statement has been made, Fox News, Bob Pockrass, shared some possibilities.

He wrote on X, “Still TBD on 23XI and Front Row charters. If they don’t sign, then TBD what NASCAR does with those charters (sell them, hold them to see if they sign, etc). They can field open cars but the payouts (at least under current deal) less than a third of what charter teams get.”

Since the charter’s introduction in 2016, there have been 36 charters floating around the Cup series with the total field length being shortened from 43 cars to 40, leaving 40 unchartered (or open) cars to compete. So would 23XI and FRM operate as open car teams if NASCAR takes away their charters?

Competing as an open car is not a profitable deal. Because non-chartered teams barely get paid anything compared to chartered ones. The Sports Business Journal reported back in 2016 that the total payment pool to teams from points events was under $228 million. That includes approximately $77 million in race purses; $57 million to chartered teams; and $3 million to non-chartered teams. The pay parity was to encourage new owners to buy charters and reap the benefits.

Hence, it seems unlikely that 23XI would agree to be a non-chartered team. And they would also not barge to sign the deal as they have previously said. So what happens? Only time will tell. Meanwhile, what is the new charter deal?

The new charter deal

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NASCAR has signed a massive TV rights deal which is reportedly worth 7.7 Billion from 2025 to 20231  and includes FOX, NBC, Amazon, Warner Bros., and TNT Sports (plus CW for the Xfinity Series).  This is what started the debate and teams asking for a bigger slice of the pie. Originally, the deal was that teams get 25 percent of the TV revenue through the race purse, while NASCAR takes 10 percent, and the tracks—most of which NASCAR owns—get 65 percent. What is proposed in the new deal?

As reported by SBJ, The charter guarantees a starting spot in all races, plus certain guaranteed revenue streams. That money is going to increase from the current version of the deal after NASCAR secured a 40% increase in its media rights deals from 2025 through 2031. Precise terms of the new charter agreement have not been disclosed, but the last-place charter holder received $4 million to $5 million annually under the old charter agreement from 2016-24. The annual payment will increase to around $8.5 million in the new version that starts next year, sources say.

This figure is nowhere close to what Denny Hamlin demanded. The #11 asked for $18 million just to put the race car on the track every week. However, if this is a losing deal for teams, why did they sign it? Some say they were forced and others, like Hendrick Motorsports, said found the deal to be okay. Rick Hendrick said, “Not everybody was happy. But in any negotiation, you’re not going to get everything you want, and so I felt it was a fair deal, and we protected the charters, which was No. 1; we got the [revenue] increase. I feel a lot of things we didn’t like. We got taken out, so I’m happy with where we were.”

What would happen with 23XI and FRM remains to be seen. Can NASCAR afford to lose a team owned by one of the most renowned faces in the world? What do you think? Let us know in the comments below.