What Did Teams Get Out Of The Settlement In 23XI Racing’s Antitrust Lawsuit Against NASCAR? A Lot, It Sounds Like

Bet NASCAR wishes they had settled this one from the beginning.

A settlement was reached today in the bombshell lawsuit against NASCAR that was filed last year by two of its race teams, 23XI Racing (which is owned by NASCAR driver Denny Hamlin and NBA legend Michael Jordan) and Front Row Motorsports.

The surprise settlement, which came after 8 days of testimony in the trial that rocked the sport, brought to an end the lawsuit from the teams that accused NASCAR of being a monopoly and using unfair (and unlawful) practices to protect their monopoly at the expense of the teams it relies on to put on their show.

The case all stemmed from disagreements between NASCAR and teams that arose during tense negotiations over the renewal of the Cup Series charter agreement.

Not to get too into the weeds, but back in 2016 NASCAR introduced charters for the first time, which guaranteed 36 teams a starting spot in each Cup Series race, as well as increased payouts. And the original charter agreement also gave teams certain “veto” rights through what was known as the “three strikes rule.” (Essentially, teams could issue NASCAR a “strike” if the series made a change that would cost the teams money without their agreement, and after three strikes, the non-compete provision of the charter agreement would be unenforceable).

Well the charter agreement was up for renewal in 2024, and the teams presented NASCAR with a list of their demands to renew their charters. The demands, which came to be known as the “four pillars,” included: 1) Permanent charters, which means they wouldn’t have to be “renewed” every 7 years and NASCAR couldn’t threaten to revoke them if they didn’t sign a new agreement; 2) An increased share of television revenue; 3) A voice in NASCAR governance; and 4) A portion of any new revenue streams.

Unfortunately for the teams, negotiations didn’t go well. NASCAR chairman Jim France refused to make the charters permanent, they eliminated the “three strike” rule, didn’t give teams any portion of new revenue, and while teams did get an increase in TV revenue, it was less than what they were asking for.

It all came to a head on September 6, 2024 when NASCAR sent the new charter agreement to teams and gave them until midnight to sign, or else they would lose their charters in 2025.

Most of the teams signed the agreement, because they couldn’t risk losing their charters (which would ostensibly put them out of business), but 23XI and Front Row instead filed a lawsuit accusing NASCAR of anticompetitive conduct.

And over the past year, it’s been nasty.

NASCAR did indeed revoke 23XI and Front Row’s charters, meaning they were forced to run the past year as “open” teams and get a smaller portion of the revenue. And over the course of the litigation, it’s been embarrassing for both sides at times as documents, emails and text messages gave us an unprecedented insight into the sport.

Things got particularly heated when text messages were revealed showing NASCAR Commissioner Steve Phelps calling Richard Childress Racing team owner Richard Childress a “stupid redneck” who should be taken out back and flogged, and testimony from the trial painted a picture of executives who were out of touch and unwilling to compromise with team owners.

That brings us to today, the day after the teams rested their case and NASCAR began presenting their evidence in the courtroom. Before testimony started this morning, it was announced that the two sides had agreed on a settlement and that the case was finally over, although the damage to NASCAR and their image has already been done and will likely be long-lasting if they don’t work quickly to address it.

So what did the teams get out of the settlement?

Well, other than a couple of things, we don’t know for sure. But we know that they got one of their “four pillars” when it was announced by team attorney Jeffrey Kessler that NASCAR had finally agreed on permanent, or “evergreen” charters going forward.

That’s obviously a massive win for the teams, because it guarantees that their investment can’t be taken away the next time the charter agreement comes up for renewal. It allows investors to come in and know that their investment is safe, and is likely to lead to a massive amount of money pouring into the sport now that the charter system has proven its value and is here to stay. (The first charters sold for a couple million dollars, and the most recent charters that were sold went for around $40 million, despite the uncertainty surrounding the lawsuit and the new charter agreement. That price is only going to skyrocket).

And it’s not just 23XI Racing and Front Row Motorsports that benefit from the settlement: Every team in the garage will now have permanent charters, meaning the lawsuit and settlement accomplished what the negotiations couldn’t.

As a result of the settlement, both 23XI and Front Row will also get their charters back after losing them last year.

Beyond that, we don’t know a ton about what was agreed to. It’s safe to say that NASCAR will be paying a pretty sizeable amount of money to the teams, not only to cover the money they lost from running as open teams last year but also to cover their expenses from the lawsuit and the damages that they were seeking. But we don’t know exactly how big that check will be.

It’s also been reported that the “three strikes rule” is back – kind of, this time as the “five strikes rule,” giving the teams the seat at the table they wanted. And teams are also reportedly getting a share of IP revenue from NASCAR (the Next Gen car is considered intellectual property, though it’s unclear whether that’s part of what the teams will be getting).

Now, it sounds like the teams got pretty much everything they were asking for from the beginning, which shows that NASCAR could have agreed to this from the beginning if they really wanted to help the teams become profitable. I’m sure there are some people at NASCAR who are wishing they would have just done all this during the negotiations…and if there’s anybody who’s not thinking that they probably shouldn’t be working for NASCAR anymore.

But now the real work for NASCAR begins: Repairing their relationships with teams and fans that have been so badly damaged throughout this entire process.The post What Did Teams Get Out Of The Settlement In 23XI Racing’s Antitrust Lawsuit Against NASCAR? A Lot, It Sounds Like first appeared on Whiskey Riff.