On September 7, 23XI Racing, the NASCAR Cup Series team co-owned by NBA legend Michael Jordan and NASCAR driver Denny Hamlin, made waves by refusing to sign a new charter agreement with NASCAR. This move comes less than a week after one of its drivers, Tyler Reddick, won the regular season championship, marking a high point for the relatively young team.

History of 23XI Racing

Founded in 2020, 23XI Racing was born out of Jordan’s passion for motorsports and his desire to increase diversity in the sport. Partnering with Hamlin, who drives for Joe Gibbs Racing, the team took its name from Jordan’s iconic No. 23 from his NBA career and Hamlin’s long-time No. 11 in NASCAR.

Another key figure in the team is Curtis Polk, Jordan’s long-time business adviser.

The team debuted in the 2021 season, fielding the No. 23 Toyota Camry for Bubba Wallace, NASCAR’s only full-time Black driver in the Cup Series. The team expanded in 2022, adding a second car, the No. 45 Toyota, with Tyler Reddick as its driver. 23XI Racing quickly made an impact, with Wallace earning the team’s first win at Talladega in 2021 and Reddick’s strong performances further elevating the organization.

The Charter Controversy

Despite its rapid success, 23XI Racing has been at odds with NASCAR over the new charter agreement. Charters, introduced in 2016, guarantee teams a starting spot in races and ensure a share of the revenue. However, this new deal, which extends from 2025 to 2031, left 23XI unsatisfied. The team claimed it did not have a fair opportunity to negotiate and decided to hold out. NASCAR has not commented on the situation.

But 23XI has. During a press conference, Polk called the battle with NASCAR as “David facing Goliath,” with NASCAR threatening to eliminate the charters if the deal wasn’t accepted by midnight. That didn’t make his team buckle, he said, noting, other teams “may have felt pressured and compelled to sign the agreement under significant duress.”

And according to Polk the reason why is the terms were “particularly harmful to our operations and our ownership group’s interests and intellectual property rights.”

“This isn’t the 1960s, and these predatory practices will not withstand scrutiny and be accepted in 2024,” Polk said. “NASCAR has superior bargaining power and undue influence over the sport and the charter process. They wielded this power continuously over the past few months and consistently rejected broad team requests on major issues while providing minor changes for pet issues that some teams requested in one-on-one meetings.”

Jordan, Hamlin, and Polk expressed their frustration, noting the importance of equitable treatment for all teams. The holdout from 23XI and Front Row Motorsports — the only other team to reject the agreement — could lead to the loss of their charters if no compromise is reached.

The teams have consistently pushed for four key objectives in the charter negotiations: a larger share of the overall revenue, a formal role in governance decisions, a portion of the profits from business deals where team or driver likenesses are used, and, most critically, for charters to become permanent, securing long-term stability, ESPN reported.

It took NASCAR more than two years of heated negotiations to finally secured a new revenue agreement with 13 organizations last weekend—leaving only two teams refusing to sign the deal, AP reported.

Still, many teams complained to AP that they felt rushed Multiple teams told the Associated Press that the contract document was filled with grammatical errors and was far from being ready for signing. The teams submitted revisions — more like requests — back to NASCAR, only to receive a 105-page response from NASCAR at 5 p.m. on Friday, Sept. 6.

Joseph Riddick “Rick” Hendrick III, owner of the NASCAR team Hendrick Motorsports and co-owner of JR Motorsports, said he signed out of exhaustion. He told reporters at a news conference, he “was just tired” of the drawn-out negotiations over the new agreement, The Washington Post reported.

Future Uncertainty

The decision not to sign the agreement could have far-reaching implications for 23XI Racing’s future. Without a charter, the team risks losing guaranteed entry into races. The team has been exploring adding a third car for the 2025 season and extending Wallace’s contract, but these plans remain uncertain amid the charter dispute.