Court Sides with NASCAR: Hamlin and Jordan Face Uphill Legal Battle

A federal court has dealt a major blow to Denny Hamlin and Michael Jordan’s 23XI Racing, along with Front Row Motorsports, in their ongoing legal standoff with NASCAR. The Fourth Circuit Court of Appeals has vacated a previous injunction that had temporarily allowed the two teams to retain their chartered status, guaranteeing their spot in every NASCAR Cup Series race. The ruling favors NASCAR and could ultimately allow the organization to reclaim the six charters held by the teams, though that outcome is not yet certain. This decision marks a significant result in a larger legal battle that challenges NASCAR’s current business model.

At the center of the lawsuit is NASCAR’s controversial charter system. A charter in NASCAR is basically a team’s $40M ticket that guarantees a team a starting position in every NASCAR Cup Series race. Along with that, a fixed slice of television, sponsorship, and race day revenue. These agreements are vital to a team’s financial health and sponsor relationships. Only 36 charters exist, so their scarcity, combined with the power they give NASCAR to set terms, has caused friction among some team owners. In September, 23XI and Front Row refused to sign the new charter agreement, claiming a lack of negotiation and objecting to a clause that prevented them from suing NASCAR in the future. In a statement, 23XI said it “did not have an opportunity to fairly bargain” and aimed for “constructive discussions” instead.

The teams filed an antitrust lawsuit in November, alleging NASCAR’s charter model amounts to monopolistic control that limits competition and leaves teams with no real leverage. In December, a U.S. District Court judge granted the teams a preliminary injunction, allowing them to continue competing with charters as the case played out. Their lead attorney, Jeffrey Kessler, argued that the financial damage of losing those charters midseason would be devastating, risking the teams’ relationships with sponsors and personnel. “It would cause havoc,” Kessler said in court, adding that without the charter status, “they may lose drivers and sponsors” altogether.

NASCAR, meanwhile, didn’t just defend itself — it countersued. The league accused 23XI, Front Row, and Jordan’s longtime business advisor, Curtis Polk, of forming what it called an “illegal cartel,” claiming the teams coordinated threats to reject the new charter deal and interfered with NASCAR’s negotiations with TV partners. NASCAR argued the charter agreement was fair and that 13 other Cup Series teams had already signed it without issue. In a statement following the ruling, NASCAR said the court’s decision “reinforces the fairness and legality of our approach.”

That ruling came after appellate judges expressed skepticism during May’s hearing. One judge pointedly told Kessler’s team, “You can’t have your cake and eat it too,” suggesting the teams couldn’t both benefit from NASCAR’s charter system while at the same time suing to dismantle it. Ultimately, the court found the plaintiffs hadn’t shown a strong enough likelihood of success to justify continuing the injunction. The judges did not decide whether NASCAR’s overall charter system violates antitrust laws. The current lawsuit doesn’t yet prove enough to keep the temporary protections in place.

Still, the story isn’t over. The ruling does not automatically strip the teams of their charters. They now have 14 days to request a rehearing before the full court. If they don’t, or if that request is denied, the ruling becomes official seven days after that deadline, meaning the earliest NASCAR could act to revoke the charters is June 26th. Whether or not NASCAR does so remains to be seen, but it’s a choice that could completely ruin relations with two current full-time Cup teams. The final decision could reshape the field for the remainder of the season.

Kessler has already said the teams are “disappointed” by the ruling but confident in the strength of their broader antitrust claims. If they succeed, the court could force major changes to NASCAR’s charter structure, including how deals are negotiated and whether NASCAR can legally demand teams waive their right to sue. For now, Michael Jordan and 23XI Racing face the very real possibility of racing without a guaranteed starting spot for the rest of this season. Though the final chapter of this legal race has yet to be written.