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September 22, 2020

How the NASCAR Charter system works

Bubba Wallace wearing American flag mask
Jared C. Tilton
Getty Images

Majority owner Michael Jordan and minority owner Denny Hamlin announced Sept. 22 their formation of a single-car team, with Bubba Wallace as the driver. Jordan and Hamlin have agreed to purchase a Charter, paving the way for the team’s creation.

RELATED: Michael Jordan, Denny Hamlin to start team with Bubba Wallace

It was on Feb. 9, 2016 in Charlotte, North Carolina, that NASCAR executives and team owners stood together to announce a landmark long-term agreement on an owner Charter system.

The agreement provided teams with an increased business certainty and the ability to work more closely with NASCAR to continue to produce best-in-class racing.

Below are a few key points about the Charter agreement:

— This was announced in 2016 as a long-term agreement. Earlier in 2020, NASCAR President Steve Phelps announced an extension of the Charter system through 2024. “The Charter agreement is delivering stability and long-term value to existing team owners while providing a clear path for ownership in the NASCAR Cup Series,” Phelps said. ” … A healthy ownership structure ensures strong, competitive racing for our fans, which is a goal the industry collectively shares.”

— There are 36 Charter teams. The number 36 was not pre-determined — back in 2016, NASCAR analyzed which teams showed a long-term commitment to the sport by attempting to qualify every week for the past three years. That criteria yielded 36 Charters.

— A Charter guarantees entry (and therefore, a portion of the purse) into the field of every NASCAR Cup Series points race.

— Teams may sell their Charters on the open market.

— Charter owners may transfer their Charter to another team, for one full season, once over the first five years of the agreement.

— Charter teams are held to a minimum performance standard. If a Charter team finishes in the bottom three of the owner standings among all 36 Charter teams for three consecutive years, NASCAR has a right to remove the charter.

— Organizations now have a hard cap of four cars; there no longer is the ability to run a fifth car for rookie drivers.

— NASCAR Cup Series fields consist of 40 cars — a change made, from 43 cars previously, when the Charter system was initially announced. That means 36 Charter teams are guaranteed to make every points race, and four non-Charter (or “open”) teams will complete the rest of the field.