NASCAR Court Ruling Deals Major Blow to 23XI Racing

In a stunning development in the NASCAR world, a recent federal appeals court ruling has left 23XI Racing, co-owned by NBA legend Michael Jordan and Cup Series star Denny Hamlin, reeling. The U.S. Court of Appeals for the Fourth Circuit vacated a preliminary injunction on June 5, 2025, that had allowed 23XI Racing and Front Row Motorsports (FRM) to operate as chartered teams during their ongoing antitrust lawsuit against NASCAR. This decision threatens the teams’ financial stability and could reshape their future in the sport.

The legal battle began in October 2024 when 23XI and FRM refused to sign NASCAR’s new charter agreement, alleging it created an illegal monopoly over stock car racing. Charters guarantee teams entry into Cup Series races and a share of the sport’s lucrative $1.1 billion annual television deal. The teams secured a preliminary injunction in December 2024, ensuring their chartered status while the lawsuit proceeded. However, the appeals court’s reversal means 23XI and FRM could lose their charters as early as June 26, 2025, forcing them to compete as “open” teams.

Running as open teams would be a financial disaster. Denny Hamlin estimated the loss of chartered status could cost 23XI “tens of millions” in revenue, as open teams lack guaranteed race entry and receive significantly less prize money. Without charters, the teams’ six cars must qualify on speed each week for NASCAR’s 40-car field, risking exclusion if entries exceed the limit. This uncertainty could also drive away sponsors and star drivers, with 23XI’s Bubba Wallace and Tyler Reddick potentially seeking more stable teams.

The court ruled that 23XI and FRM failed to prove a strong likelihood of success in their antitrust case, particularly challenging NASCAR’s requirement that teams waive their right to sue as a condition of charter agreements. The judges deemed this clause a standard business practice, not anti-competitive behavior. Despite the setback, 23XI remains defiant. Hamlin stated, “We’re committed to running this season open if we have to,” while attorney Jeffrey Kessler confirmed plans to seek a rehearing by the June 19 deadline.

NASCAR’s victory has sparked concern across the sport. Dale Earnhardt Jr. expressed dismay on his podcast, warning that the ruling could jeopardize 23XI and FRM’s operations. Meanwhile, U.S. District Judge Kenneth Bell urged all parties to settle out of court, citing the “alarming” legal costs and potential reputational damage. The antitrust lawsuit is set for trial on December 1, 2025, but the immediate loss of charter status could cripple the teams before then.

As the NASCAR community braces for the fallout, the ruling highlights the high-stakes power struggle between team owners and the governing body. For 23XI Racing, the fight is far from over, but the road ahead looks increasingly treacherous.