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Alex Palou Risks Burning Bridges as Another Contract Debacle Ensues

Written by Archie O’Reilly, Edited by Meghana Sree

Palou is certainly the centre of attention now; Credit: Amber Pietz

This time a year ago, we were in the midst of a lawsuit involving Alex Palou and Chip Ganassi Racing. The Spanish driver announced that he would not be continuing with the team in 2023 despite a press release announcing otherwise. Instead, it was announced he would join Arrow McLaren in IndyCar and sign a contract with the McLaren Formula 1 team.


A settlement was eventually reached that Palou would drive for Ganassi in 2023 while remaining Reserve Driver for McLaren in F1. Beyond that, it long seemed the case that McLaren would be the destination in IndyCar for 2024, regardless of the inevitability of him winning the championship with Ganassi this year.


It appeared the only thing that would prevent a drive at McLaren in IndyCar next year would be finding a vacant seat in F1, as his management had been trying. But things have now changed, and in dramatic fashion.


Following the conclusion of track action on qualifying Friday at the Gallagher Grand Prix, a report from The Associated Press revealed that Palou was not going to honour his McLaren contract for 2024 and beyond.


And here we are, left at the start of a second year of impending contract drama. Palou may be cruising to his second IndyCar championship on-track, but he is, once again, in the middle of a mess off-track.

Palou is currently in McLaren's driver roster; Credit: Formula 1

The mere mention of a 2024 contract with McLaren is intriguing and a cause for some contention given it has long been suggested that Palou isn’t permitted to speak with other teams until the start of September. That has provoked suggestions that he possibly turned down the contract due to finding it was invalid.


But that doesn’t seem likely. He would surely have known about the period of non-negotiation before signing.


Through the entire situation runs a stark lack of clarity. Some have raised the question of whether the agreement with McLaren could be merely verbal, but the point raised in a letter to staff by McLaren Racing CEO, Zak Brown, that Palou had already been paid an advance on his salary makes that seem unfeasible.


In the letter obtained by The Associated Press, Brown said of Palou: “This is incredibly disappointing considering the commitment he has made to us both directly and publicly and our significant investment in him based on that commitment.”


McLaren have already invested a lot in Palou, including “millions of dollars” of F1 testing, plus the guarantee of practice sessions with the F1 team - at the US Grand Prix last year and a further outing later this year - to try and give him a path into the series. They also paid his legal fees during the legal dispute last year.

Zak Brown certainly had his say on the situation; Image credits - Joe Skibinski

Brown’s frustration is justifiable. It is understandable that he may feel betrayed, mentioning Palou failing to reciprocate the commitment put into his development by McLaren. There were assurances from Palou that he would drive for the team, but instead they have been shoved into uncertainty.


Once again, a blame game is ensuing. Chip Ganassi released a statement, describing McLaren’s stance as “inaccurate and wrong”, with the most damning part reading: “I grew up respecting the McLaren Team and their success. The new management does not get my same respect.”


It is hard to get to the crux of who exactly is to blame - and the reality is that you can pin it on several parties. Mismanagement is certainly a factor, with Palou’s management coming into question after last year’s events; drivers cannot be expected to take charge of their own careers and make decisions themselves, so it doesn’t feel right to wholly blame Palou.


Soon after news emerged that Palou wouldn’t be honouring his contract with McLaren, Monaco Increase Management, who were in charge of Palou, revealed that they were “bitterly disappointed” to find he had broken the agreement and stepped away from managing the Spaniard. They claimed to the Associated Press that Palou had stopped taking their calls and didn’t inform them of his decision.


The situation isn’t pretty, and lots of ties and relationships are being severed.

Credit: James Black

It is a debacle that raises so many questions - about Palou’s future and even beyond that, with implications for numerous teams and drivers.


What do McLaren do now? Does Felix Rosenqvist stay and deservedly maintain a seat at a top team? Does Rosenqvist, opposingly, not gamble on staying at McLaren, and search for certainty elsewhere?


What about the drivers linked to Ganassi? The likes of Callum Ilott and David Malukas, who have been linked with moves to the team, will continue to lack clarity on their own futures, in hand causing uncertainty for their own teams and other teams keen on their signatures.


One of the most pertinent points of curiosity is whether Palou is welcome at Ganassi after the events of last year, but everything seems to point towards a renewal being probable. And, in many ways, one can’t blame Palou for pushing to remain with the team, and the team can’t be blamed either for wanting to put last year’s events in the past and maintain Palou.


The No.10 car operation has been nothing short of incredible this year, and disregarding any agreement with McLaren, it would be illogical to walk away.

The No 10 Chip Ganassi Racing Honda car; Credit: Chris Owens

The entire predicament that is unfolding is largely a legacy of a sequence of misguided decisions last year. One does wonder whether the prospect of F1 maybe weighed too heavily, skewing decisions being made. And with no path into the series through McLaren given their settled lineup, what happens to any prospective route into F1 now?


Recommitting to Ganassi and possibly losing the McLaren affiliation would probably suggest F1 isn’t an imminent prospect, especially gaining a seat that would allow Palou to be anywhere near as competitive as he is in IndyCar. And maybe that is a blessing in disguise for Palou, who would always be welcome back in IndyCar but could risk an F1 venture not working out with a so-called ‘back-marker’ team.


One alternative, more outlandish theory that has been suggested by those speculating is that maintaining Honda links through Ganassi could provide a route into F1 via Aston Martin when Honda starts supplying their engines in 2026, and if Fernando Alonso decides to retire.


In any case, though, Palou is risking burning lots of bridges through these sagas - incidentally displaying the ruthlessness that is a stark contrast to his understated, laid-back character in public. He does risk his reputation taking a hit and prospective teams possibly being tentative.


However, motorsports can be brutal, with winning being the sole focus of teams and drivers. Palou is a proven winner - the current best driver in IndyCar - and that could render these messy contract dealings irrelevant in the eyes of many. Teams will do their utmost to try and get the signature of a driver with such pedigree and avoid having to compete against him.

How will this saga affect Palou's reputation?; Credit: Joe Skibinski

Of course, there will be mistrust in some quarters. But Palou is clearly just thinking about his career, and that is understandable and testament to his drive to win.


McLaren are yet to win a race this season, with their leading driver, Pato O’Ward, 151 points adrift of Palou with three races remaining. Palou himself has four wins for Ganassi, and he leads second-place Scott Dixon by 101 points in the championship. It is evident which option he would favour.


Regardless of the perceptions of different parties, legal trouble is likely again. If Palou does have a legal contract with McLaren, it isn’t as easy as just saying you won’t fulfil it; with money already paid to Palou, the organisation will want some money back. Alternatively, there could be trouble if the McLaren contract wasn’t valid.


There is yet another chaotic contract situation unfolding. And where this leaves Palou isn’t exactly clear as circumstances continue to evolve, and tensions grow once more.


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