The NASCAR lawsuit could take another major twist. 23XI Racing and Front Row Motorsports were previously granted a preliminary injunction from a North Carolina district court to race under the new ‘charter agreement’ until the ongoing antitrust lawsuit comes to a close. As a result, both teams had guaranteed entry and payouts for all the races, even though the plaintiffs refused to put pen to paper when the agreement was signed by 13 out of 15 teams last year.

It was a significant victory for Jeffrey Kessler’s clients, who got temporary relief from what has been a bitter and drama-filled legal battle so far. However, that could change in the upcoming weeks if the recent comments by the three-judge federal appeals court panel is anything to go by.

NASCAR insider reflects on the uncertain future for 23XI and Front Row

NASCAR was never going to give in without a fight. The sanctioning body suffered a major blow when the preliminary injunction went in favor of 23XI and Front Row Motorsports. The organization has since argued that the basis of the injunction was flawed, and it seems like the Fourth Circuit Court of Appeals panel is leaning towards the defendants. Judge Paul Niemeyer even said, “If you don’t want the contract, you don’t enter into it and you sue. Or if you want the contract, you enter into it, and you’ve given up past releases.” Essentially, what the judge is saying is, you can’t have your cake and eat it, too! The plaintiffs refused to sign the deal, so they didn’t get the charters, but still complained that they should have them for the 2025 season and got them anyway.

So, could this lead to Michael Jordan and Bob Jenkins’ teams losing their charters? There seems to be a real possibility of that happening. Speaking on ‘The Teardown’ podcast, The Athletic’s Jeff Gluck said, “If the judges come back and they say, ‘Okay, well, yeah. We’re gonna overturn the preliminary injunction; NASCAR wins for now on this until the trial. Well, that means that all the 23XI and Front Row cars would have to run as open cars. The charters that they got to run, Riley Herbst and Noah Gragson’s car from SHR in theory, those I don’t know what happened.”

The repercussions of losing their charters could be significant. In terms of the racing side of things, Michael Jordan’s team could potentially lose Tyler Reddick if he opts to switch teams in the absence of a guaranteed entry in the Cup Series. But financially is where the plaintiffs will pay the ‘real’ price. As of now, both teams get guaranteed payouts from NASCAR as per the terms of the 2024 charter agreement, which will cease the moment the injunction goes in the sanctioning body’s favor. This could amount to millions of dollars.

The average cost of running a Cup car in a single race is approximately $250,000. If the verdict for the injunction is out in the next three weeks, and if it goes in NASCAR’s favor, the plaintiffs will be in deep trouble. Assuming 21 races are left on the calendar, each team will lose about $5 million per car, and with 23XI and Front Row Motorsports having six cars in total, the costs could rise to a staggering $30 million in total. And that’s without the guaranteed payments.

Will this be financially sustainable for either team? Time will tell. While it’s all speculation right now, history isn’t on the plaintiffs’ side. According to Judge Stephanie Thacker, in more than 125 years of the Sherman Antitrust Act, no court has ruled in favor of the teams’ argument that signing a release means a monopoly. However, attorney Jeffrey Kessler is remaining hopeful, as he believes such a situation has never been assessed properly before. There’s always a first time, even though the odds are stacked against them.

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Reversing the preliminary injunction will be tricky

As far as court cases go, this one is as high-profile as it gets. 23XI and Front Row being allowed to retain their charters was a big win for both the teams, and the court’s verdict also allowed the sale of Stewart-Haas Racing’s charters. A significant sum of money has been spent to bring Riley Herbst and Noah Gragson in, but now the big question is, what happens if the injunction is reversed?

Jordan Bianchi said, “They go back to NASCAR is what I was told.” But what about the money spent by 23XI and Front Row Motorsports? Will they be refunded for a purchase that was later reversed? If yes, who will cough up? Both teams have made preparations for the 2025 campaign with the assumption that they will receive the payouts. Overturning the North Carolina district court decision would mean the Fourth Circuit Court of Appeals panel would be overturning a verdict that would cost millions.

However, NASCAR wants the court to swiftly revoke the preliminary injunction, claiming that it’s harming the sport and the other 13 teams. The sanctioning body’s attorney Christopher Yates said, “Other teams are being hurt because, but for the injunction … other charter-holders would have gotten more money. They would have gotten a bigger part of the charter pie.” While both sides have a fair argument, only one will come out victorious in the end. What decision do you think the appeals panel will take? Let us know your thoughts in the comments!