How Does the NASCAR Charter System Work?

Have you ever wondered how NASCAR teams are chosen to compete in the Cup Series each week—or why there always seem to be the same numbers and big names in the starting lineup? That’s the result of the NASCAR charter system. If this sounds confusing, you’re not alone—lots of fans, even some longtime ones, still ask, “What exactly is a charter, and why do teams care about it so much?” This breakdown explains what the system is, why it was created, and how it impacts racing, business, and even the salaries of drivers in the modern NASCAR landscape.

What Is the NASCAR Charter System?

The NASCAR charter system is a business and participation agreement for the Cup Series that gives select teams a “charter”—a guaranteed spot in every race. This model took effect in 2016 and was meant to give race teams more stability and make team ownership in NASCAR closer to owning a franchise in other sports. It’s like having a club membership that guarantees you access and perks, even if your team isn’t always the fastest.

According to the official NASCAR site, Steve Phelps, Commissioner of NASCAR said, “The Charter agreement is delivering stability and long-term value to existing team owners while providing a clear path for ownership in the NASCAR Cup Series … A healthy ownership structure ensures strong, competitive racing for our fans, which is a goal the industry collectively shares.”

Charter Core Concepts

• A charter is an ownership slot allowing teams automatic entry into every Cup Series points race, no “qualifying in on speed” required.
• Teams without a charter (“open teams”) must qualify for a limited number of non-guaranteed field spots.
• NASCAR issued 36 charters when the system began, and now only 40 cars start each Cup race, so most “open” teams face extreme competition for just four spots.

Why Was the Charter System Created?

For decades, NASCAR didn’t have a franchise/guaranteed entry system—unlike other major sports leagues.

• In the old days, a team could fade from existence overnight, and owners had nothing to sell but outdated parts.
• The charter system built real equity for team owners: A charter can be bought, sold, and leased. This gives team owners something valuable that holds business weight—especially when it comes time to retire, merge, or cash out.

Major Goals

• Stability: Teams know they’re in every race. That means more predictable income from TV, ticket sales, and sponsorships.
• Business Value: Charters can be traded, like NBA or NFL franchises. This “asset” mentality makes sponsoring or buying a team way more attractive to investors.

According to Wikipedia, Rick Hendrick via the Race Team Alliance context, said that the charter system was born to “create some sort of permanent value for the teams,” responding to a time when defunct teams had nothing of real business value to sell.

How Much Does a NASCAR Charter Cost?

NASCAR charter values have soared since 2016.

• Early charter prices (2016-2017): Around $1–$3.5 million.
• Recent sales (2021-2023): Some charters sold for $10 million, $13.5 million, and most recently, a reported $40 million!
• Market value depends on team performance, name recognition, and business trends.
• Like a house or rare sports card, a charter is only worth what someone will pay—but that number has only gone up.

If you want to know the latest ups and downs, check out our deep-dive on NASCAR Charter Cost.

How Are Charters Bought, Sold, or Leased?

• Teams can sell their charter outright—providing a major cash windfall.
• They can lease a charter for just one year out of every five, allowing new teams to “try before they buy.”
• Leasing can keep a charter producing value even if a team is between sponsors or rebuilding.
• NASCAR approves all transactions to maintain fairness and competitive balance.

How Many Charters Are There, and Who Gets Them?

• There are currently 36 charters in the NASCAR Cup Series.
• Teams can own or acquire up to four charters each (recent rule changes may reduce the maximum to three for new entrants), preventing “super teams” from locking out the grid.
• NASCAR “owns” the right to revoke a charter from teams that underperform (bottom three in points for three straight years).

Charters Are Selective

• Original charters were awarded based on past participation and team history.
• Losing a charter (through underperformance or sale) can end a team’s regular Cup presence.

How Do Charters Impact Race Entry and Prize Money?

• Charters guarantee entry—and payout—for every Cup Series race, which means a reliable stream and a bigger slice of the TV money and purse pool.
• Open teams get less money and must hustle for each entry. As a result, they find it much harder to attract big backers.

How Does the Charter System Change the Business of Racing?

Charters have made NASCAR racing more like running a business, less like a high-speed gamble.

Key Business Shifts

• Investors can now analyze team worth and future income with more accuracy.
• Sponsoring a team with a charter is more appealing—companies know their logo will be seen all season.
• Teams are more likely to innovate and invest (facilities, pay for good crew members, etc.) knowing their grid spot is secure.

Want the nitty-gritty math, revenue sharing, and legal side? Dive into our full Business of Racing guide.

Do Charters Affect NASCAR Drivers Salary?

Absolutely. Driver pay—especially for top names—tracks closely with a team’s financial health.

• Reliable income from a charter means owners can afford longer, higher-salary contracts with star drivers.
• When revenues shrank or teams folded in the old system, even famous drivers faced pay cuts or unemployment overnight.
• Now, with team value tied to charters, you’re much more likely to see consistent, healthy NASCAR drivers earnings numbers at both the top and middle ranks.

NASCAR Charter Key Rules vs. Past System

What’s an “Open” Team? Can They Ever Win?

Yes, open teams (those without a charter) can still qualify and even win a race. But it’s rare—the hurdles are much higher.

• “Open” cars compete for four spots in each 40-car field, racing against each other and sometimes outqualifying charter teams.
• Any earnings or media coverage are crucial to survival. But without the built-in security of the charter, it’s an uphill battle.

What Happens If a Team Fails to Perform?

NASCAR wants charters in the hands of active, competitive teams:

• Any team whose car is bottom-three in owner points for three straight years can lose its charter.
• NASCAR can revoke and redistribute charters to more deserving teams, keeping the lineup strong and the racing competitive.
• If a team chooses to sell or disband, NASCAR must approve the new buyer before the charter changes hands.

How Does a Charter Impact a Team’s Primary Sponsor?

• A solid charter is a major selling point to a primary sponsor.
• Sponsorship contracts and advertising values are higher because teams can promise guaranteed TV time across every race.
• Without a charter, attracting (or keeping) a headline sponsor is much harder. Many iconic deals—think Lowe’s with Jimmie Johnson—were possible because sponsors trusted their logo would race every week.
• The broader market has seen a Fall of Iconic NASCAR Sponsors as costs rise and companies demand more certainty. The charter model responds directly to this by boosting consistency and exposure for partners.

Common Myths About the Charter System

• Myth: “Charters killed competition.”
  Reality: Competition is still fierce—teams switch drivers, invest in technology, and can lose charters if they let performance slip.
• Myth: “Anyone with money can buy in.”
  Reality: All sales must get NASCAR’s approval for business stability and good standing.
• Myth: “Fans see the same cars, nothing changes.”
  Reality: The system lets small teams grow and inspires creative approaches to staying in the game.

The Future: Will There Always Be Charters?

As media rights, team budgets, and the world of NASCAR change, so does the charter system. There are ongoing debates about:

• Whether charters should be permanent or time-limited
• How to balance team equity with competition
• If more charters should be issued (for expansion, new manufacturers, or mergers)
• How teams and NASCAR can work together, especially in tough economy years or with shifts in sponsor culture

As charter prices rise, some critics worry about entry barriers for new owners—a big piece of the ongoing business negotiations, especially as teams want a bigger slice of new TV deals.

How Does the Charter System Compare to Other Sports?

The NASCAR charter system is most similar to major league franchising models.

• NHL, NBA, NFL: Teams own a spot, can sell the franchise, and share in league revenue.
• NASCAR: Teams own a charter (not the car number itself) and share in TV/purse money, but race at the same events for prize money.

Unlike the “stick-and-ball” leagues, in NASCAR, independent and open teams still have a (much harder) path to race—making it truly unique.

Why Should Fans Care?

• Understanding charters explains why your favorite teams are almost always racing and why sponsors appear or disappear.
• It shows how team mergers, sales, and surprise new entrants happen.
• If you love the inside game—contracts, salaries, and business drama—the charter system is where the sport’s big moves start.

Quick FAQs on NASCAR Charter Basics