23XI and FRM risk losing Nascar charters after legal setback

23XI Racing and Front Row Motorsports (FRM) have suffered a major setback in their legal battle against Nascar over the charter system after the US Court of Appeals overturned the injunction agreed in December 2024.

The injunction had meant 23XI and FRM were allowed to compete in the Nascar Cup Series and receive the same benefits as other chartered teams while still pursuing their lawsuit against the series. The ruling also granted the teams permission to purchase charters from Stewart-Haas Racing and that Nascar must approve those purchases.

This has now been overturned in a hearing where judges questioned the teams’ attorney Jeffrey Kessler on why they should enjoy the benefits of the charter agreement while suing Nascar over the particulars of it. The fact this case was without precedence was cited as a key reason for the ruling, with the judges stating that the ‘theory of antitrust law’ asserted by 23XI and FRM ‘is not supported by any case of which we are aware’.

The US Court of Appeals also said that the teams failed to make a ‘clear showing that they were likely to succeed’ in their case. Without that, the injunction was revoked.

The ruling won’t take effect for two weeks, which gives 23XI and FRM the chance to appeal. But, if this passes, the teams will have to compete as open teams for the remainder of the 2025 season.

As open entries, 23XI and FRM are no longer guaranteed entry to races and will earn less than a third of what a chartered team makes for competing in a race. FRM team owner Bob Jenkins claimed in the original injunction that the payout from the purse would be so low as an open entry that it would not cover the costs of going to the racetrack.

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It should be noted, though, that both teams were prepared to enter the 2025 season as open entries before the surprise decision to allow an injunction was passed. 

‘We are disappointed by today’s ruling by the Fourth Circuit Court of Appeals and are reviewing the decision to determine our next steps,’ read a statement from Kessler.

‘This ruling is based on a very narrow consideration of whether a release of claims in the charter agreements is anti-competitive and does not impact our chances of winning at trial scheduled for December 1st.

‘We remain confident in our case and committed to racing for the entirety of this season as we continue our fight to create a fair and just economic system for stock car racing that is free of anticompetitive, monopolistic conduct.’

This is the latest twist in a long and complicated case that has seen the two teams initially refuse to sign Nascar’s proposal for a new charter agreement in September 2024 before filing an antitrust lawsuit against the series, in which they accused the organisation of monopolistic practices.

Their request for an injunction was initially rejected by US District Judge Frank D Whitney, but then US District Judge Kenneth D Bell later agreed to the injunction.

The trial date for the lawsuit is set for December of this year.