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Opinion

Who will be the winner from the Alex Palou contract saga?

OPINION: It's hard to remember a more bizarre motorsport contractual boxing match than the one we’re witnessing unravel over Alex Palou, between Chip Ganassi Racing and McLaren right now. But what’s the real story here? And who will come out on top?

Alex Palou, Chip Ganassi Racing Honda Grid

Reigning IndyCar champion Alex Palou’s destiny for 2023 has become a tug of war between his current team, Chip Ganassi Racing, and McLaren.

Just days before this weekend’s crucial race at the Indianapolis road course, Ganassi issued a lawsuit against its own driver, using his own tweets as evidence against him. File this one under ‘you couldn’t make it up’… 

The background

Ganassi’s summons, filed by Marion County Court, is directed to Alex Palou Montalbo and ALPA Racing USA, LLC. Ganassi’s legal counsel stated that it “estimates two hours would be sufficient for the hearing, and requests that it be set before the end of August”.

Now consider the personalities involved. To say team bosses Chip Ganassi and McLaren’s Zak Brown don’t get on is a massive understatement, so this one cuts deep. It’s actually an amazing contrast to Brown’s relationship with another IndyCar team owner Michael Andretti.

The two are partners in Extreme E and Australian Supercars teams, and during a media roundtable at St. Petersburg earlier this year bounced around the idea of loaning Colton Herta to test for McLaren's F1 team (which subsequently happened at Portimao earlier this month, with all parties benefiting).

Back to the matter at hand. On 12 July, Chip Ganassi Racing put out a press release stating that it had taken up its option on Palou’s services for 2023, the driver having signed a two-year-plus-one-year-option contract towards the end of his rookie season with Dale Coyne Racing.

The statement contained a quote from team owner Chip Ganassi, stating: “Alex’s track record speaks for itself. He’s a proven champion and one of the most formidable drivers in the world. We are very excited to continue working together.”

Perhaps the most remarkable aspect was that this same press release included a quote from Palou himself. This read: “It’s a great feeling knowing I’ll be back with Chip Ganassi Racing next season.

“The team welcomed me with open arms from Day 1, and I’m excited to continue working with Chip, [CGR managing director] Mike Hull, the folks on the #10 NTT DATA Honda and everyone within the organisation. The goals remain the same and we will continue to work relentlessly towards achieving them.”

Why would a driver who had just signed a McLaren contract say that? Turns out, according to Palou, he didn’t.

Some hours later he tweeted: “I have recently learned from the media that this afternoon, without my approval, Chip Ganassi Racing issued a press release announcing that I would be driving with CGR in 2023. Even more surprising was that CGR’s release included a “quote” which did not come from me.

Palou has found himself at the centre of a contractual and legal storm

Palou has found himself at the centre of a contractual and legal storm

Photo by: Michael L. Levitt / Motorsport Images

“I did not approve that press release, and I did not author or approve that quote. As I have recently informed CGR, for personal reasons, I do not intend to continue with the team after 2022. This evening’s unfortunate events aside, I have great respect for the CGR team, and look forward to finishing this season strongly together.”

Press releases often get churned out without the drivers or team bosses physically taking the time to say their words into a recorder for the PR to transcribe – a lot of cut and paste goes on in the routine grind in a busy environment. But it is absolutely common practice to run them past the individual, via email or text, before the release occurs.

Someone is going to get that chance to partner Lando Norris in 2024, and surely getting the chance to strut your stuff is the best audition in town? Who needs a showreel or PowerPoint when you’ve got telemetry data?

Why did this happen, then? One can only assume that Palou let Ganassi know of his intentions to leave for McLaren, and that it kicked off the frankly bizarre sequence of events from there. In doing this dirty laundry in public, there’s certainly somewhat of a stain here. And Palou’s subsequent tweet – effectively, ‘I didn’t say this!’ – is downright embarrassing.

Why does he want to leave a title-winning team?

The question of why Palou is so keen to leave one of the best – if not the best right now – teams in IndyCar for a team that hasn't yet won a title (although Arrow McLaren SP wasn't actually namechecked in the announcement) we can safely assume revolves around McLaren's F1 operation. Just as Palou has seen with IndyCar peers Herta and Pato O’Ward, there’s the chance to get genuine, near-contemporary F1 seat time with a team that finished fourth in last year’s constructors’ championship. And he wants a slice of that.

Also, it’s a team with a current driver, Daniel Ricciardo, whose days appear numbered in one of its race seats. Someone is going to get that chance to partner Lando Norris in 2024, and surely getting the chance to strut your stuff – as we saw with O’Ward in Abu Dhabi last year and Herta at Portimao – is the best audition in town? Who needs a showreel or PowerPoint when you’ve got telemetry data?

A McLaren release dropped within minutes of Palou’s social media response, stating that: “Alongside his racing duties in 2023, Palou will also test with the McLaren F1 Team as part of its 2021 MCL35M F1 car testing programme with fellow drivers Pato O’Ward and Colton Herta."

Palou said: “I’m extremely excited to join the driver roster for such an iconic team as McLaren. I’m excited to be able to show what I can do behind the wheel of a Formula 1 car and looking at what doors that may open.

“I want to thank everyone at Chip Ganassi Racing for everything they have done for me.”

Herta had the chance to test a 2021 McLaren at Portimao recently

Herta had the chance to test a 2021 McLaren at Portimao recently

Photo by: McLaren

Palou’s legal team issued its first comment on the situation on Thursday, and it included a key line: “We are disappointed that Chip Ganassi Racing would attempt to keep Alex from an opportunity to compete in Formula One, and even more so with CGR’s public court filings and continued commentary to the press on this matter.”

This is likely going to be a line of attack for the defence. Should its client remain with Ganassi, his opportunity for career growth would effectively be compromised – which is perhaps one for a U.S. trade law expert to reason.

In Ganassi’s legal counsel’s papers entitled ‘emergency motion for expedited recovery’ it seeks documents from McLaren Indy and McLaren Racing – presumably for evidence of Palou’s new contract details. It needs to establish the deal in black and white, but surely this will also reveal the remuneration on offer, which will make an interesting contrast to what CGR’s salary would be.

Remember, Palou signed his current deal in 2021, before he became champion, when he had just a single podium finish to his name. One would imagine the numbers involved would be a fraction of McLaren’s offer. In ‘The Land of the Free’, is a judge going to obstruct someone from being paid more money to do, essentially, the same job?

But it is absolutely clear that Ganassi wants to keep his champion. As Chip told Associated Press’s Jenna Fryer on Wednesday, “I want to win championships. I want Alex Palou in my car.”

The crux of the matter will likely be Palou’s 2021 contract, in which Ganassi has clearly enacted its option on his services for 2023. And while this writer is not privy to those details, of course, these options tend to be multi-layered in terms of performance achievements – and need to be “agreements”. If one party vehemently wants out, at what point does the “deal” become untenable? We see it in other sports all the time, where the ‘player’ has the power.

Some shade has also been thrown in the Indianapolis media about the quality of Palou’s management team, Monaco Increase Management. This is odd, as his direct manager, Roger Yasukawa, is a former IndyCar driver himself and its senior advisor, Daniele Audetto, used to run the Ferrari and Super Aguri F1 teams.

Ganassi does not want to lose Palou, but will he be able to keep a driver who doesn't want to stay?

Ganassi does not want to lose Palou, but will he be able to keep a driver who doesn't want to stay?

Photo by: Chris Owens

What happens next?

As Palou climbs into Ganassi’s machine this weekend, one wonders how it’s going to play out over the rest of the IndyCar season. It’s hard to see Ganassi’s modus operandi of driver openness, in terms of sharing data, being business as usual if one of the pack is about to defect to a rival. Palou already told NBC in Toronto that, since his imminent departure was announced, he has had reduced remote access to Ganassi data.

Ganassi himself will feel inclined to make this as awkward for McLaren and Palou as possible – the fact the dispute is out in the public domain is proof of that – as he’s a fearsome bear of a team owner.

This writer recalls a wonderful evening at Daytona, where Ganassi was the grand marshal for the Rolex 24 Hours, and at the gala dinner Dario Franchitti was the compere for a Q&A with the man himself: “I’m so scared right now” was the three-time Indianapolis 500 winner’s opening gambit. He was only half joking, and that’s coming from a driver who won two of his 500s and three drivers’ titles with Ganassi's team!

The real solution to this situation is that IndyCar should perhaps consider taking a leaf out of F1’s book and form a Contracts Recognition Board

Ganassi instills a degree of fear because he’s a ruthless operator, which is also what makes him so successful. As he so often says “Chip likes winners” – so you can extrapolate that he hates to lose at anything.

Conclusion

Returning to the original question, just who will be the winner from the Alex Palou contract saga? In the end, an Indiana court’s judge will have the final say. It’s certainly not for me to do that. After the judgment, all relevant parties will need to suck it up and move on.

Although the actual complaint has been sealed, one would hazard a guess that the main points to be decided are: Is Palou’s original Ganassi contract option a stopper to any other deal he subsequently signed? Do improved salary terms and the potential for F1 opportunities have an influence on the outcome? And, the bottom line, can Ganassi force Palou to drive for him next year when the Spaniard clearly wants away?

This might turn into a case of settling on a dollar figure to be paid as compensation to Ganassi by Palou and his team. Another potential outcome is that he gets benched while being paid next year, in IndyCar terms, and that would be disappointing to say the least.

The real solution to this situation is that IndyCar should perhaps consider taking a leaf out of F1’s book and form a Contracts Recognition Board. Born out of Michael Schumacher leaving Jordan for Benetton (improved conditions, enhanced future career prospects – sound familiar?) it meant all F1 driver contracts get lodged in a central hub and any disputes are settled with lawyers familiar with the subject.

In this way, great teams like Chip Ganassi Racing and McLaren Racing, and super drivers like Alex Palou, will know exactly where they stand in future.

What happens next will be determined by the courts

What happens next will be determined by the courts

Photo by: Gregg Feistman / Motorsport Images

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