NASCAR Charter System: What a Charter Is and How It Works

Before 2016 a Cup Series team that missed the Daytona 500 had a car, a crew, a sponsor with a contract to honor and no guarantee of anything at the next race either. Nothing it owned had value apart from the equipment in the shop. Then NASCAR changed the rules, and an entry in a race became an asset that could be sold for millions of dollars.

The NASCAR charter system is how that works. A charter is one of 36 guaranteed entries in every NASCAR Cup Series points race. It is attached to a car, not to a driver, and it belongs to the team that owns the car. The team that holds a charter is guaranteed a place in the 40-car field at every race and a share of the sport's revenue, chiefly from television, that the remaining entries do not get. The other four places in each race go to open cars, which must earn their way in on speed. Charters can be bought, sold and, within limits, leased. Since a settlement in December 2025 they are permanent.

What a charter is: one of 36 guaranteed places in every Cup race

The simplest description is a guaranteed start. If a chartered car shows up at a Cup Series points race, it races, regardless of how fast it is in qualifying. That includes the Daytona 500, the most valuable start of the year.

A charter is attached to an entry, not a person. A driver who leaves one team for another does not take a charter with him; the charter stays with the car number and the team that owns it. A team that hires a new driver keeps the charter. A team that sells its charter to another team loses the guaranteed start, even if it keeps the driver.

What comes with it

The guaranteed start is the obvious benefit, but the money matters more. Each charter brings a share of the revenue NASCAR distributes to teams, most of it from the sport's television contracts. A chartered car receives that payment whether it finishes first or fortieth, along with additional payments tied to its results.

That predictable revenue is what turned charters into assets. A team that knows it will receive a certain amount of money every year can plan, borrow, and attract investors in a way that a team relying entirely on sponsorship and prize money cannot.

• 36Charters in the Cup Series
• 40Cars in a standard Cup field
• 4Places for open cars per race
• 2016First season with charters

Fixed by the charter system since 2016. The field size is the standard Cup Series field; the open places are those not reserved for chartered cars.

What a charter is not

It is not ownership of NASCAR. Charter holders do not own a share of the sanctioning body, which remains a privately owned company controlled by the France family. A charter is a contract between a team and NASCAR, and its value comes entirely from the terms of that contract. That distinction sits at the center of almost every argument about the system, including the one that went to federal court in 2025.

Chartered and open cars: how a 40-car field is filled

A standard Cup Series field is 40 cars. NASCAR cut it from 43 when the charter system began in 2016, and the reduction was part of the design: fewer places, more of them guaranteed.

90%10%

• Chartered cars36
• Open cars4

The allocation in a standard NASCAR Cup Series points race since 2016. If fewer than four open cars enter, the field is smaller than 40.

Show the numbers

How the 40 places in a Cup Series field are allocated

Item	Value
Chartered cars	36
Open cars	4

The four open places

The four places that are not reserved for chartered cars go to open cars. An open car is any entry without a charter: a part-time team, a new team building toward a full-time program, a one-off entry for a particular driver or a team waiting to buy a charter.

If four or fewer open cars enter a race, they all start. If more enter, the open cars compete for the four places, and the fastest in qualifying, or the best placed under NASCAR's procedures if qualifying is rained out, take them. The rest go home. Since 2025 NASCAR has also kept an open exemption provisional, which can add a 41st car for a driver of international standing who fails to make the field on speed; Helio Castroneves started the 2025 Daytona 500 that way. That means a team with a charter can qualify last and still race, while an open car that is faster than a dozen chartered cars can miss the show.

What the open entries race for

Open cars race for the same purse as chartered cars, but they do not receive the guaranteed revenue that comes with a charter. Their income is limited to the purse and their own sponsorship. That gap is large enough that running a full season as an open car is a significant financial risk, and few teams try it for long.

The Daytona 500 exception

The Daytona 500 has its own qualifying procedure, with the Duel races on the Thursday before the race setting most of the field. Open cars at Daytona have more than one route into the field. The details are set out in our guide to how NASCAR sets the starting grid.

Comparing the two kinds of entry

	Chartered car	Open car
Start in every Cup points race	Guaranteed	Must qualify for one of four places
Guaranteed revenue from NASCAR	Yes, a fixed payment plus performance elements	No; earns from the race purse only
Obligation to enter every race	Yes	No; may run a partial schedule
Can be bought or sold	Yes, with NASCAR's approval	Nothing to sell beyond equipment
Can be taken away for poor results	Yes, under the performance clause	Not applicable

Where the money comes from: the television pool and the payment per charter

Most of what a Cup team receives from NASCAR comes from the sport's media rights. Television networks pay NASCAR for the right to broadcast races, and a share of that money flows to the teams. Before 2016 that share was distributed largely through race purses, which meant a team was paid according to how it finished each week.

The charter system restructured the payment. Chartered teams receive money from several elements:

• A fixed payment per charter. Paid to every charter holder regardless of results. This is the core of what makes a charter valuable.
• A performance element based on recent seasons. Charters that have finished higher in the owner standings over recent years receive more. This rewards consistent performance and gives a team's history a dollar value.
• Current-season results. Points and finishing positions during the year.
• Race results. Payments tied to where a car finishes in each race.

The exact proportions and dollar figures are not published in full. They were also one of the main points of contention in the negotiations that led to the 2025 agreement, in which teams argued that the fixed element was too small to cover the cost of running a car.

What an open car earns by comparison

An open car receives its share of the purse in each race it starts, and nothing beyond that. It does not receive the fixed payment, and it does not build up the historical-performance element that a charter accumulates. The gap means that an open car of identical speed to a chartered car earns significantly less over a season, which is why the charter has the value it does.

The owner standings that feed the performance element run alongside the drivers' standings and are explained in our guide to how NASCAR awards points for each race.

Why the charter system was created for 2016

For most of the sport's history, a Cup team owned nothing it could sell except its equipment. A team could spend decades building a program, and when the owner retired, the only value left was in the cars and the shop. That was a problem for owners and for NASCAR.

The top-35 rule

From 2005 through 2012 NASCAR guaranteed a starting place in every race to the top 35 cars in the owner standings. The remaining places went to the fastest of the other entries in qualifying. The rule gave established teams some security, but it was tied to performance and could be lost in a single bad season.

The rule also created a market of sorts. Teams bought and swapped owner points between car numbers in the offseason so that a new entry could start the season inside the top 35. That showed that a guaranteed start had value. It did not give teams any way to own it.

After 2012 the top-35 rule was dropped, and the field was set mainly on speed, with provisional places for the highest-placed cars in owner points that had not made it on speed. That approach did not give teams security either.

The Race Team Alliance

In 2014 a group of the largest Cup teams formed the Race Team Alliance to negotiate with NASCAR as a group. The owners argued that they were spending enormous sums on a sport whose value accrued to NASCAR and the track owners, while the teams themselves were worth little. They wanted equity, or something like it.

The charter system was NASCAR's answer. It was announced on February 9, 2016, after months of negotiation, and took effect that season. It was not equity in NASCAR, but it gave teams something they could own and sell.

A timeline of guaranteed entries

Year	What changed
2005	Top 35 cars in owner points guaranteed a start in every race
2013	Top-35 rule dropped; field set mainly on speed, with provisionals from owner points
2014	Race Team Alliance formed by Cup team owners
2016	Charter system announced February 9; 36 charters issued and the field cut to 40
2024	New agreement offered; 13 of 15 charter-holding organizations sign, two sue NASCAR
2025	New agreement takes effect; antitrust case goes to trial in December and settles

The 36 original charters went to teams that had attempted to qualify for every race in the three preceding seasons. The original agreement ran for nine years, through 2024. How the sport arrived at this point, from beach racing to a privately owned sanctioning body, is told in our history of how NASCAR started.

Buying, selling and leasing a NASCAR charter

A charter can be sold to another team, with NASCAR's approval. That provision is what turns the guaranteed start and the revenue that comes with it into an asset with a market price.

1. 1Agreement between teamsThe selling and buying teams agree a price or a lease fee privately.
2. 2Submission to NASCARThe transfer is submitted to NASCAR, which must approve it under the charter agreement.
3. 3Checks against the limitsNASCAR checks the buyer against the cap on charters per organization and the leasing limits.
4. 4ApprovalNASCAR approves the transfer and the charter is assigned to the buyer's entry.
5. 5AnnouncementThe teams announce the change, often with the car number the charter will run under.
6. 6RacingThe buyer's car is guaranteed a start in every Cup race from that point.

The general sequence for a sale or lease. NASCAR's approval is required, and terms between the two teams are private.

Leasing

A team can also lease a charter to another team for a season. The original agreement limited how often this could happen, allowing a given charter to be leased out only once in a five-year period, so that charters could not be used as a permanent rental business by owners who no longer wanted to race.

Leasing has been used by teams that wanted to step back for a season, by new teams that wanted to test the waters before buying and by owners holding a charter they planned to sell later.

How prices climbed

Prices are rarely confirmed by either party, so the figures that circulate are reported, not official. In the first years of the system, charters were reported to sell for amounts in the low millions of dollars. As the sport's television income grew and the number of investors wanting into the Cup Series grew with it, reported prices rose sharply. By the mid-2020s, reported prices were in the tens of millions of dollars.

The rise reflects two things. The first is the revenue a charter brings, which increased with the media contract that began in 2025. The second is scarcity. There are 36 charters and no more, and a new team that wants a guaranteed place in every race has to buy one from somebody who already has it.

What a buyer is actually paying for

Three things, and only one of them is a place on the grid. The buyer gets the guaranteed start, which removes the risk of a sponsor paying for a car that misses the Daytona 500. It gets the stream of payments from NASCAR, which is the part a lender or an investor can value. And it gets something to sell later, because the charter keeps its value when the team leaves.

What it does not get is a car number, a driver or a crew. Car numbers are registered with NASCAR by the team, and a buyer usually runs the charter under a number of its own choosing. The equipment, staff and sponsors stay with the seller unless they are part of a separate deal. That is why a sale can look strange from outside: a number disappears from the entry list, another appears, and the guaranteed place moves with neither of them.

The investors who arrived in the Cup Series during the 2020s, including owners from other sports and entertainment, came in largely through charters. A guaranteed asset with a resale value is easier to explain to a board than a race car.

The Stewart-Haas sale

The clearest example of the market came when Stewart-Haas Racing closed its Cup program after the 2024 season. Its four charters were reported to have been sold or reassigned to several other organizations, including Haas's own new single-car team, rather than passing as a block to one buyer. Several of the sport's existing teams used the sale to expand.

The cap on how many charters one organization may hold

Under the original agreement a single organization could hold no more than four charters, and the largest Cup teams have run at that number for most of the charter era.

The reason is competitive balance. Without a cap, a wealthy organization could buy up charters and field a large share of the field, reducing the number of independent teams. NASCAR and the other owners had no interest in a sport dominated by one or two very large operations.

How the largest teams were treated

The cap mattered most to the largest teams of 2016, which were already running four cars. They kept their charters, but could not add a fifth. The public record of how the cap's exact terms were negotiated, and whether any organization was given transitional treatment, is thin, and this guide does not guess at it.

Alliances and the limits of the cap

The cap does not stop teams from working together. Many smaller organizations have technical alliances with larger ones, buying engines, chassis and engineering support. A team running two cars under a technical alliance with a four-car team is, in practice, part of a larger operation, even if the charters are held separately.

That has been true for most of the charter era. Hendrick Motorsports has supplied engines and technical support to other Chevrolet teams; Joe Gibbs Racing has worked closely with other Toyota teams. The cap limits ownership, not influence.

Why it matters

The cap protects smaller teams by limiting how many charters the largest ones can absorb. It also limits the market for charters: a team already at four cannot buy another, which reduces the number of potential buyers and, arguably, holds prices down. Whether the cap works as intended depends on whether technical alliances are counted as part of the same organization, which they are not. That gap is a real one.

The performance clause: how a charter can be taken back

A charter is not unconditional. Under the performance clause, a charter that finishes among the bottom three chartered cars in the owner standings for three consecutive seasons can be taken back by NASCAR.

The rule was designed to stop teams from holding charters while making no effort to compete. A team that takes the guaranteed revenue and runs a car that never threatens anybody is taking money that could go to a team trying to win.

How it works in practice

Each season NASCAR ranks the 36 chartered cars by their position in the owner standings. Open cars are not counted. The three chartered cars at the bottom of that ranking have a mark against them. If the same charter is in the bottom three for three seasons in a row, NASCAR may revoke it.

1. 1Season oneThe charter finishes among the bottom three chartered cars in the owner standings.
2. 2Season twoIt finishes in the bottom three again; the team is now one season from risk.
3. 3Season threeA third straight bottom-three finish makes the charter eligible to be taken back.
4. 4NASCAR's decisionNASCAR may revoke the charter and reissue it under the terms of the agreement.

The general mechanism as described in the charter agreement. NASCAR has discretion over revocation and the charter is ranked only against other chartered cars.

Why it has rarely bitten

The clause is a deterrent more than a regularly used tool. Teams near the bottom of the standings know the risk, and a team that has two bad seasons will usually try to sell the charter, or spend to improve, before a third. The clause pushes poorly performing charters toward owners who will run them better.

It also creates a quiet competition at the back of the field that viewers rarely see. A car finishing 33rd rather than 34th in the owner standings may be the difference between keeping a charter and losing one.

What a charter obliges a team to do

The guarantee runs in both directions. A team that holds a charter must enter every Cup Series points race with that charter. It cannot skip races because the car is not competitive, because the sponsor is not paying or because the driver is injured. If the regular driver cannot race, the team has to find a substitute.

The obligation is the price of the guarantee. NASCAR wants to know that 36 cars will be at every race, so that the field is full and the television product is predictable. A charter holder that fails to show up is breaching its agreement.

The car, the sponsor and the schedule

The agreement also imposes commitments on how the car is run. Teams must field a car that meets NASCAR's rules. They must take part in the series' promotional activities, appear at scheduled events and meet commercial obligations around sponsorship and media.

Why it suits NASCAR

The obligation is one reason NASCAR agreed to the charter system in the first place. Before 2016, NASCAR had no assurance that a full field would appear at every race. With charters, it has 36 cars guaranteed, and it can promise broadcasters a full field. The four open places add the remainder.

The car's obligation and the driver's waiver

Two separate rules are easy to confuse. The charter obligation belongs to the car: the entry must be at every race. The championship eligibility rules belong to the driver, who must attempt every race to stay eligible for the title unless NASCAR grants a waiver, usually for injury or illness. When a regular driver misses a race, the team puts a substitute in the chartered car to meet its obligation, and the regular driver's team asks NASCAR separately for a waiver. The car scores owner points for the substitute's result. The driver scores nothing that week. The two sets of standings drift apart in exactly that way, which is part of why the owners' table matters to a charter holder even when the drivers' table looks settled.

What happens when a team cannot meet it

A team that cannot meet its obligations, for financial reasons or otherwise, usually has to sell or lease the charter rather than skip races. That is one reason charters change hands: an owner who can no longer afford to run a car cannot simply park it.

The 2025 agreement, the antitrust suit and the settlement

The original charter agreement expired at the end of 2024. Negotiations over a new one ran for more than two years and were contentious. The teams wanted a larger share of the media revenue, permanent charters and a stronger voice in the sport's governance. NASCAR offered a new agreement in September 2024, with a short deadline to sign.

Thirteen of the fifteen organizations that held charters signed. Two did not: 23XI Racing, co-owned by Michael Jordan and Denny Hamlin, and Front Row Motorsports. In October 2024 they sued NASCAR in federal court in North Carolina, alleging that the sanctioning body was using its control of the sport to impose unfair terms, in violation of antitrust law.

What the two teams argued

The complaint's core claim was about leverage. NASCAR sanctions the top level of stock car racing in the United States, owns many of the tracks through its 2019 merger with International Speedway Corporation, and specifies the single-source parts every Cup car is built from. A team that wanted to race at that level, the suit argued, had nowhere else to go, so the terms NASCAR offered were not a negotiation in any normal sense. The teams objected in particular to terms that they said would limit their ability to challenge NASCAR or take part in a competing series, and to the absence of permanent charters.

NASCAR's position was that it had negotiated with the teams for years, that the agreement improved their payments substantially and that most of the garage had signed it. Both points could be true at once, which is why the case went as far as it did.

The case during 2025

The two teams spent much of 2025 in court over whether they could race as chartered entries while the case went on. The question went back and forth between the trial court and the appeals court, and both teams kept racing throughout. The case went to trial in December 2025.

The settlement

The trial ended in a settlement announced in December 2025, before a verdict. The central term, as published, was that charters would become permanent rather than expiring at the end of a fixed term, which had been one of the main demands of the teams throughout the negotiations. The two teams' charters were restored.

Other terms were reported at the time, covering revenue, governance and the share NASCAR takes when a charter is sold. This guide states only the permanence term, which NASCAR and the teams announced, and treats the rest as reported detail. A reader wanting the full terms should look at the official statements rather than secondhand summaries.

The settlement changed the nature of the asset. A charter that expires is worth what it earns until expiry. A charter that does not expire is worth what it earns indefinitely, which is a different calculation and, for its owners, a much better one.

How a charter differs from a franchise in the NFL or NBA

American fans are used to franchises. An NFL team or an NBA team is a franchise: a member of a league with a fixed number of teams, the right to play every game on the schedule and a share of the league's revenue. A NASCAR charter looks similar. It is not.

No territory

An NFL franchise has a territory. It plays home games in a city, and the league protects that market from other teams. A NASCAR charter has no territory. Teams are mostly based around Charlotte, but a charter gives no exclusive rights anywhere. Every race is on a neutral track.

No draft

The major American leagues use a draft to distribute new talent, with the worst teams choosing first. NASCAR has nothing like it. Drivers are hired on the open market, and a team with more money can hire the best drivers without restriction.

Who owns the league

The biggest difference is ownership. The NFL is, in effect, owned by its teams; the owners vote on major decisions, and the league office works for them. NASCAR is a privately owned company controlled by the France family, and the charter holders are contractors, not owners. NASCAR also owns many of the tracks: in 2019 it merged with International Speedway Corporation, which owned Daytona, Talladega and a number of other venues.

Feature	NASCAR charter	NFL franchise	NBA franchise
Who owns the league	Private company, France family	The 32 member clubs	The 30 member clubs
Territory	None	Protected home market	Protected home market
Draft	None	Yes, reverse order of finish	Yes, with a lottery for the top picks
Guaranteed participation	Every Cup points race	Every game on the schedule	Every game on the schedule
Can be sold	Yes, with NASCAR approval	Yes, with owners' approval	Yes, with owners' approval

Why the comparison matters

The difference explains why the charter dispute happened at all. NFL owners do not need to sue the league to get a better share of revenue, because they are the league. NASCAR teams have no such power, and the charter is the strongest bargaining position they have ever held. The broader shape of the sport, from the Next Gen car to the Chase, is in our guide to NASCAR's rules, and the rest of American racing has its own section on the motorsport hub.

IndyCar's own charter system

IndyCar introduced its own charter system for the 2025 season. It was modeled loosely on NASCAR's, with some important differences.

Twenty-five charters were awarded among the teams that had competed full-time in the previous season, with a maximum of three per team. A charter guarantees a starting position at every IndyCar race except one. The charters also sit alongside the Leaders Circle, the series' long-running program of guaranteed payments to full-season entries, so that the guaranteed start and the guaranteed money go to largely the same cars.

The race the charters do not cover

The exception is the Indianapolis 500. Qualifying for the 500 remains open, and no team has a guaranteed start in the race. A chartered team with a full-time driver can fail to qualify for the most important race of its season. The field for the 500 is limited to 33 cars, and qualifying sets the field from all of the entries, chartered or not. How that process works, from the first qualifying day to the fight for the last row, is the subject of our guide to the Indy 500 qualifying format.

Why IndyCar made that choice

The Indianapolis 500 is the series' biggest event, and the drama of qualifying, including the possibility that a well-known driver will be bumped from the field, is part of its appeal. Guaranteeing places would remove that. IndyCar chose to protect the 500's history over the security of its teams for that one race.

How it compares to NASCAR

IndyCar's system is smaller and newer, and its charters carry less value because the series' revenues are smaller. It was also introduced in a more cooperative atmosphere, with the teams and the series agreeing terms rather than fighting over them in court. The broader rules of the series appear in our overview of how IndyCar's season and cars work.

The two systems answer the same question: how to give a race team something it can own. NASCAR's answer took a decade of bargaining and a federal lawsuit to settle. IndyCar's arrived after watching it happen.