What is a NASCAR charter? All about it and the stalled charter negotiations

NASCAR, one of the most popular motor racing series in America, is a privately owned company by the France Family, descendants of Bill France Sr. who is considered as the founding father of the premier stock car racing series.

For much of the series' existence, the France family collected the profits generated by the sport and only recently introduced a charter system. It is a franchise-based model, that provides incentives for full-time teams, providing business certainty and the ability to work closely with the governing body.

On Feb. 9, 2016, NASCAR executives and team owners announced the landmark agreement on an owner-charter system. During that time, the executives analyzed the teams that consistently participated in every race weekend over the past three years, resulting in 36 teams being rewarded a charter based on this criteria.

A charter automatically guarantees entry into each points-paying Cup Series race over a season, and therefore a portion of the prize purse depending on the race result every weekend. Big teams were also restricted to owning four cars each.

The team owners can sell their charters or lease them to another team for one full season, once over the first five years of the agreement. The governing body also has the right to revoke a charter if a team finishes in the bottom three among the charter teams for three consecutive seasons.

The charter system also restricted the field size to 40 cars. In 2020, the charter agreement was extended to 2024.

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Exploring why Cup teams are upset about NASCAR's charter system

The current charter deal is set to expire at the end of the 2024 season, with NASCAR and the teams failing to reach an agreement over the new deal, as of now.

According to multiple reports, each charter receives a $8-9 million payout, which includes the payouts from each race weekend, with the amount varying on the finishing position.

The team owners are pushing NASCAR to double the current payout(as reported by Sportico.com), as it doesn't cover the overall expense of running a team, and forces them to depend on sponsor money. Last season the negotiations reached a standstill, with teams showing their discontent by not attending a meeting arranged by the governing body.

After NASCAR signed a record $1.1 billion per year media deal for 2025 and beyond, teams are negotiating for a higher share of revenue. However, the governing body claims teams don't see the costs associated with running and maintaining the tracks.

The exclusive negotiating window for extending the charter deal expired in January, but it doesn't indicate that the charter system will be eliminated in the future. The governing body is committed to resolving the issue with the teams.