NASCAR President Reveals Charter Agreement Negotiation Details

NASCAR has introduced a new charter agreement covering the period from 2025 to 2031, following two years of intensive negotiations with its teams. Out of 15 Cup Series teams, 13 have agreed to the terms. However, the agreement was not universally well-received, with teams like 23XI Racing and Front Row Motorsports opting out and taking legal action against NASCAR, claiming antitrust violations.

The charter system, introduced in 2016, is vital to NASCAR’s operations. It replaced the wearying points system to safeguard team participation and assure them a share of race purses. Nonetheless, the negotiation process over this latest charter agreement was fraught with challenges and dissatisfaction among some teams.

NASCAR’s reluctance to render charters permanent, akin to licenses in professional sports franchises, emerged as a major point of contention. Presently, NASCAR retains the right to revoke a charter if a team underperforms over three consecutive years or fails to consistently field cars. This provision has been a significant obstacle for teams considering stable long-term investments.

NASCAR President Steve Phelps remained firm on the charter system’s value despite ongoing criticism. He explained during an interview with The Athletic:

“I look at two things. We got a lot of dialogue and a lot of negotiation with our race teams, and I think there are things in this charter agreement that starts in ’25 that those 32 charters held by 13 teams, that there are things in there they really like and there’s some things in there that they don’t like, or they don’t like as well. And you could say the same thing about our negotiation; there are things about the charter that we really like, and there are some things that we don’t.

“With that said, that’s a negotiation, and that’s exactly what we did: We negotiated in good faith with our race teams to find a balance that was going to help the sport move forward positively. And I think that’s what the charters do. I think the charter system is a good thing for NASCAR and the growth of this sport.”

However, not all parties share Phelps’ optimism about the charter framework. The ongoing lawsuit, lodged by 23XI Racing and Front Row Motorsports, challenges what they describe as NASCAR’s monopolistic practices.

Specifically, the revenue distribution and the share of media rights presented substantial negotiation hurdles, as teams sought a larger slice of the lucrative pie. NASCAR’s reluctance to fully accommodate these financial demands further complicated the discussions. Despite increasing the share from approximately 39% to a proposed 42%, the discontent among teams like 23XI Racing was palpable.

Phelps added:

“I think if you’re going to go from the top of the grid to the back of the grid, this is the most competitive that NASCAR has ever been. It just is. Again, look at the number of winners.

“Look at cars that typically have not been competing. Take a kid like Carson Hocevar, who ran really well at many, many, many races this year, particularly down the stretch. And that’s with a Spire Motorsports team that historically has not performed with top 10s or competing for top fives. That’s just a great success story, and I think that’s what this system allows.

“We’re going to have charters. We are wed to the charter system. And it makes sense because it creates healthy teams. Overall, as we think about 2024 and these 13 teams, we immediately went out and had discussions with every single team about how we’re going to collaborate together.

“To me, that’s the start of something new and special that I believe is going to work. And when I mean work, I mean it’s going to work for the race teams because it’ll make them more profitable, it’ll help them be more marketable, and because of those things, it’s going to help the sport grow. I’m super bullish on that.

“Again, we’d like all 36 charters to be signed, of course we would. No one likes to be in litigation, but that’s where we are. We’re defending ourselves vigorously.”