What was the breaking point for 23XI and Front Row?
A pair of race teams — 23XI Racing and Front Row Motorsports — filed an antitrust lawsuit in October 2024, claiming that NASCAR employs monopoly powers to restrict race team revenues and independence.
Team 23XI is five years old, fielding Toyotas driven by Bubba Wallace, Tyler Reddick and Riley Herbst. Wallace and Reddick have won a combined nine Cup Series races. Herbst made his full-time debut in 2025. The team is co-owned by Denny Hamlin, a future NASCAR Hall of Famer by any measure, who still drives full-time for Joe Gibbs Racing, as well as Jordan — yes, the former NBA megastar — and his longtime business partner Curtis Polk.
“I did it for the smaller teams as well. It’s not just me,” Jordan said last year after the suit was filed. “I think everybody should have an opportunity to be successful in any business. My voice is saying that it hasn’t been happening.”
Front Row Motorsports is owned by fast-food restaurant magnate Bob Jenkins and has fielded cars in the Cup Series since 2005. The longtime midpack organization has won four Cup races over two decades, most notably the 2021 Daytona 500 with driver Michael McDowell and currently fields a trio of Fords, driven by Noah Gragson, Todd Gilliland and Zane Smith. (No, not the former Atlanta Braves pitcher Zane Smith.)
23XI and Front Row believe that the current way of doing stock car business is preventing teams from reaching their full potential.
23XI and Front Row believe that NASCAR’s one-size-fits-all Next Gen car, rolled out in 2022 as a cost-slashing effort, has stifled creativity and performance as it requires teams to purchase the parts to build those cars from NASCAR-approved suppliers. The series cites recently disclosed financial statements provided by teams, with some of those teams saying that the new car has cut their capital costs by as much as 40%.
But the reality is that all of the above is just the appetizer. The real fight is rooted in the structure of NASCAR’s charter system, where 23XI and Front Row believe the sanctioning body is being unfair when it comes to revenue distribution among its race teams and limiting value potential.
Although not a true apples-to-apples comparison, team charters are as close as NASCAR has ever come to the “stick-and-ball” sports business model of franchising.
NASCAR points toward the rising cost of charters as proof that the model is working. In 2018, Spire Motorsports purchased a charter from departing Furniture Row Racing for $6 million. When they purchased another in 2023, it cost them $40 million.
NASCAR also is quick to point out that the charter system was created at the request of the teams, who first approached the sanctioning body with the idea.
But teams were unable to secure what they called “evergreen” charters that would automatically renew every seven years at the owner’s discretion.
On Sept. 6, 2024, teams received the final NASCAR proposal and were told they had until midnight to sign it. 23XI and Front Row refused, still questioning the sizes of the revenue distribution payouts as well as the failure to agree on permanent charters. Multiple team executives outside of 23XI and Front Row have told ESPN that Polk’s promise to them has been to deliver the permanent charter agreements they had failed to negotiate as a group.
Pretrial documents unsealed in mid-November provided unprecedented insight into the finances of NASCAR and its teams. Chartered teams receive a base of around $185,000 per event. The average team earns around $330,000 per race and top teams make just shy of $500,000. The total payout to teams in 2025 was $431 million, up from $333 million in 2024.
On Monday, a new batch of documents were released, including a summation of 23XI’s finances through 2024. From 2021 to ’24, the team saw revenue increase from $27.8 million to $62.2 million, including an increase in NASCAR payments from $6.6 million to $21.1 million. But when it comes to net income, the team peaked at $3.5 million in 2023 and lost $2.1 million in ’24. The teams’ largest source of revenue is sponsorship, at $39.6 million in 2024.
Front Row, going back to the start of the charter system, saw revenues rise from $12.8 million in 2016 to $23.6 in 2024, operating at a loss every year, from $6 million down in ’16 to $9.9 million in ’24.
As the very old racing saying goes: You want to know how to make a small fortune in racing? Start with a big one.
In late October, NASCAR’s financial statements from 2015 to ’24 were made public. In 2024, the sanctioning body’s net income was $103 million. During his State of the Sport address ahead of the season finale race at Phoenix, Phelps explained: “NASCAR’s balance sheet has more than $1.2 billion in invested capital, meaning the vast majority of what we make is invested back into the sport, our race teams and our people.”
The lead attorney for 23XI and Front Row is Jeffrey Kessler, a name that college sports fans will recognize from his representation of athletes as they fought for revenue vs. the NCAA and their schools. NFL fans know him as the lawyer who repped Tom Brady in the quarterback’s “Deflategate” controversy. Up front for NASCAR is litigator Chris Yates, who has represented everyone from the ACC and UFC to the Hollywood Foreign Press.
These two know each other very well, essentially the Richard Petty vs. David Pearson of sports antitrust legal battles. Kessler has long been the chosen legal counsel of those seeking to break up the powers of sports leagues, and Yates has emerged as the preferred attorney to oppose him.
Over the years, their combined impact on the business of sports and antitrust law in general has been immense. They most recently faced off earlier this year, as Yates helped MLS and the U.S. Soccer Federation prevail in a civil antitrust case filed by the defunct North American Soccer League, which accused the USSF of illegally overstepping its powers to control American professional soccer.
The initial trial is slated for 21 days, but whatever the outcome, appeals will be inevitable. So buckle up for more in 2026 and beyond.
Oh, it already is. The Kessler vs. Yates battle alone was going to guarantee that, but there is no community in all of professional sports like the NASCAR garage, a relatively small group of people who travel together every weekend from Valentine’s until nearly Thanksgiving, and when they aren’t on the road, all live within the same Charlotte, North Carolina, metro area.
The texts will not be used in court, but rather were a part of potential exhibits that were unsealed after their removal from trial. So while the jury will not see them, they have certainly done plenty of damage when it comes to the court of public opinion and the close-quarters world of the NASCAR paddock.
“Are there things that Steve [O’Donnell] and I said that we would like not to have made public? Yes,” Phelps confessed in October. “I’m sure there are things that 23XI and Front Row also feel that way. What I do know is this is an amazing sport. We are a very resilient sport. We have asked our employees, all of them, to put their head down and grow this sport. That’s what we’ve done.”
Charters vs. cash, it’s an either/or scenario: If 23XI and Front Row win and do indeed seek monetary damages, the amount will be determined by a jury and they will not be awarded charters. If they instead choose to pursue charters as their reward, it would supersede damages.
If NASCAR wins, it is likely that 23XI Racing would cease to exist, refusing to surrender in the fight for permanent charters. Even if 23XI wins but does so without the reward of charters, it would also likely no longer compete.
So no matter the outcome of this trial, a stock car sea change is inevitable. Either NASCAR loses an entire team, co-owned by arguably the biggest star in the history of sports, or its nearly 80-year-old business structure is thrown in the shredder. Or perhaps even both.
“The charter system is a critical part of the sport, something we created with and for the teams,” Phelps said one month ago. “We will continue to defend and preserve it, but make no mistake, the lawsuit puts this at risk.”
NASCAR was founded in 1948 by a group of stock car racers assembled and steered by Daytona Beach businessman Bill France. France served as chairman of NASCAR until 1972, when he handed the wheel over to his eldest son, Bill Jr., who led the organization until he was succeeded by his son Brian in 2003. Today, NASCAR is still owned by the France family, led by Bill Sr.’s younger son, Jim, and Bill Jr.’s daughter, Lesa France Kennedy, as well as commissioner Steve Phelps and president Steve O’Donnell.
NASCAR has always been a high-risk world of independent contracting. Whatever a team owner was willing to invest in cars and personnel, the payoff was winning races and, in theory, growing sponsorship revenue. But even the most successful racers in NASCAR history found that whenever their time at the racetrack was done, whatever they owned was worth pennies on the dollar. When sponsorship supply cratered amid the Great Recession of 2008, NASCAR garages struggled to bring in new investors and new teams.
So in 2016, NASCAR distributed 36 charters that guaranteed a starting spot in and a share of prize money from every 40-car Cup Series event, with a limit of four charters per race team. Those teams can sell or lease those charters to other interested parties, whether it be a new team starting from scratch or an existing team seeking to expand. 23XI began racing via a charter purchased from now-defunct Germain Racing in 2021. Front Row was among the 19 teams that received a charter in 2016 and have since been one of the most active teams in the market, having bought three, sold two and leased three in the past decade.
When the initial 2016 charter agreement with team owners was nearing its end at the close of the 2024 season, NASCAR and a team of RTA representatives (including Polk) spent two years negotiating an extension that began in 2025 and will run through the 2031 season. The biggest snag in those talks was how to divide up the cash from NASCAR’s new seven-year, $7.7 billion TV deal, signed in November 2023. NASCAR contended that it is already being generous, at 39% to teams, 51% to racetracks and 10% to NASCAR itself. However, teams did eventually receive a 49% share to overtake the tracks as the largest chunk of the TV pie. NASCAR also added an additional $50 million payment to the teams.