The U.S. Court of Appeals encouraged NASCAR and two of its racing teams to pursue mediation seriously following Friday’s oral arguments in the ongoing charter dispute that has cast a shadow over the 2025 racing season.

The Charter Controversy at a Glance

NASCAR is appealing a district court’s preliminary injunction that allows 23XI Racing and Front Row Motorsports to compete as charter teams this season despite refusing to sign releases waiving antitrust claims against the sanctioning body. The teams, which purchased charters from the now-defunct Stewart-Haas Racing to expand to three cars each, have filed lawsuits accusing NASCAR of monopolistic practices.

The injunction has significant financial implications, as charter status guarantees race teams specific prize money allocations under NASCAR’s team agreement structure.

Courtroom Arguments Reveal Entrenched Positions

During Friday’s hearing before a three-judge panel consisting of Paul Niemeyer, Steven Agee, and Stephanie Thacker, both sides maintained their firm positions:

• NASCAR’s Position: Chris Yates, NASCAR’s lead counsel from Latham & Watkins, argued that the injunction harms both NASCAR and other teams by forcing an “unwanted contractual relationship” on the sanctioning body. Yates emphasized that NASCAR had negotiated with teams for two and a half years on the charter agreement—behavior he claimed was inconsistent with monopolistic practices.
• Teams’ Position: Jeffrey Kessler from Winston & Strawn, representing the racing teams, framed the dispute around antitrust concerns, arguing that NASCAR’s required release has been used to maintain monopoly power. Kessler highlighted the potential harm to 23XI Racing and Front Row if they lost charter status, including the risk of drivers leaving.

Judicial Skepticism

The court appeared skeptical of the teams’ position, questioning their attempt to benefit from charter status while simultaneously challenging the agreement’s terms. One judge pointedly remarked, “You don’t sit there and say, I want in under that contract, but I want it modified to allow me to bring my antitrust claim.”

Call for Resolution

As arguments concluded, the court made an “unsolicited observation” that the case would be “a wonderful case for mediation,” noting that “both sides have major issues, and if the parties recognize a little bit of give and take, it looks to me like it’s something that could be worked out.”

While NASCAR’s counsel affirmed they would participate in mediation, he maintained, “The charter contract exists and that’s what they really want at the end of the day. They don’t like the terms… We are not going to rewrite the charter contract.”

What’s at Stake

The stakes remain high for all involved. If NASCAR were to win its appeal:

1. 23XI Racing and Front Row would be demoted to “Open” team status
2. Both teams would need to qualify for each race
3. They would lose guaranteed prize money under the charter agreement
4. Remaining two-thirds of the season would see funds redistributed to other teams

Meanwhile, a December 1 trial date looms for the broader antitrust lawsuit, with mediation scheduled to begin soon.

The court’s decision on the appeal is pending, but its strong encouragement of mediation suggests a preference for a negotiated resolution rather than continued litigation in a case that could reshape NASCAR’s economic structure.