What happens next in the Alex Palou IndyCar contract saga

OPINION: A year after being sued by his own racing team, IndyCar series tycoon Alex Palou is set to face more legal action after a dramatic turnaround in his future plans…

You couldn’t make this up, because if you did you’d be laughed at. Just over 12 months after his Chip Ganassi Racing-McLaren contract imploded, a second implosion has been sparked by the potential two-time IndyCar champion.

After the final practice session at Indianapolis on Friday night, a letter from McLaren Racing CEO Zak Brown to his employees was leaked to Jenna Fryer. The Associated Press (covering the Women’s World Cup finals in Australia).

The content was shocking as it revealed that Palu had “no intention of honoring his contract” and that this was despite the fact that he had already received an advance on his 2024 salary.

It read: “This is incredibly disappointing given the commitment he has made to us both directly and publicly and our significant investment in him based on that commitment.”

Alex Palou, McLaren, on the pit wall

Photo: Mark Sutton / Motorsport Images

Brown also pointed to the “time, money and resources that went into welcoming Alex to our team because we believed in him and looked forward to him winning IndyCar with him.”

This was highlighted by Palou’s (now former) management company – with their own statement: “Monaco Increase Management is bitterly disappointed to learn of Alex Palou’s decision to break an existing agreement with McLaren for 2024 and beyond. Together, we had created a relationship that we believed went beyond any contractual obligation and culminated in winning the 2021 Indycar crown and charting a path to F1 opportunities.”

Apparently, he was working with Palou up until Wednesday of last week – he was even planning the championship celebration at Laguna Seca! – when he dropped the bomb.

Chip Ganassi congratulates Alex Palou

Photo: Jake Galstad / Motorsport Images

Then Chip Ganassi responded with a statement of his own…

“Anyone who knows me knows that I don’t usually comment on contracts. Then, I’ve been quiet since day one about this story, but now I feel like I have to respond.

“I grew up respecting the McLaren team and their success. The new management does not have the same respect as me.

“Alex Palou is part of our team and under contract from the 2021 season. It is the intervention of this contract by McLaren that started this process and ironically, now they are playing the victim.

“Simply put, McLaren IndyCar’s position regarding our driver is inaccurate and wrong. remains under contract with CGR”.

Palu himself remained tight-lipped. He did not give television interviews on Saturday but was seen accompanied by his previous agent Roger Yasukawa. when Indy Star’s Nathan Brown cornered him on the pre-race grid, gave “no comment” to all questions about his future and whether he had already been paid by McLaren for 2024.

Alex Palou, Chip Ganassi Racing Honda

Photo: Gavin Baker / Motorsport Images

What happens next? understands that Palou signed a contract with McLaren in July 2022 that runs until 2026. Of course, after Ganassi’s legal action last year, through a mediation process he retained his services for 2023.

But this allowed Palou to take on a Formula 1 reserve driver role with McLaren, which included an FP1 outing at the United States Grand Prix and three runs with the TPC program (testing previous cars) at Barcelona, ​​the Red Bull Ring and the Hungaroring. – in the latter he shares the run with racing driver Oscar Piastri.

It is also understood that the terms of his IndyCar deal, which was delayed until 2024 due to last year’s arbitration settlement, would mean he was contracted to drive for Arrow McLaren for the next three seasons, with the option of side to pull him into the F1 racing team if the opportunity arises. This was not beyond the bounds of reason, given the impressive results of Lando Norris and, for example, the ages of Lewis Hamilton and Fernando Alonso and their potential for retirement in a few years.

The only guaranteed outcome of Palou’s notice to McLaren that he will not be joining them next year is legal action on their part. Whether that’s to force him to come on board and honor the contract, or simply seek compensation for the reversal, only time and the court’s decision will tell.

Alex Palou, McLaren MCL36

Photo: Sam Bloxham / Motorsport Images

The awkward truth, however, seems to be that Palu has signed two different contracts for two different teams for the same series. Not only that, he’s done it twice now! The fact that the team he’s apparently pledged his future to is the same one that took him to court last year is just shocking in itself.

One paddock insider opined: “A really great driver has damaged his brand by doing this and he better get used to driving for Chip for the rest of his career!”

While Ganassi claims McLaren is “playing the victim” – having sparked this whole scenario last year – Palou has been able to deflect any blame… until now. His demeanor outside the car helps here: he’s very polite, easy to deal with and always answers your questions, even if he has to deviate from their content sometimes.

But now, as his flat “no comment” responses show, the spotlight is front and center – he needs to take action on turning it around. I’m not sure he can give bad advice as he has seen firsthand the commotion this thing causes.

Patricio O’Ward, Arrow McLaren Chevrolet and Alex Palou, Chip Ganassi Racing Honda

Photo: Geoffrey M. Miller / Motorsport Images

So what changed?

There are a few strands you can piece together to try to explain why Palou opted for another summer of contract pain and potential lawsuits.

First leg: Chip Ganassi Racing is the best IndyCar team on the grid. The truth is accepted. If he wants to win a third IndyCar title next year, there’s no better place to be. And if he’s as determined to win the Indianapolis 500 as I believe he is, then it makes sense to stick with a crew he’s been stuck with literally since the first weekend of 2021, when he won for the first time at Barber.

But… Arrow McLaren’s Indy 500 efforts have been strong over the past two years. Granted, he didn’t win an IndyCar race this season, but only because Pato O’Ward’s Chevy engine hiccupped when he was poised to win in St. Petersburg.

IndyCar has two giants in Ganassi and Team Penske, but McLaren wants to make it a trio and has invested heavily to do so.

Carlos Sainz, Ferrari, with Alex Palou, McLaren

Photo: Mark Sutton / Motorsport Images

Leg two: The elephant in the room here is Formula 1. We know Palou has ambitions in that direction and his eyes light up when you discuss his runs at McLaren so far. So why would he turn his back on an opportunity that gives him a direct route – albeit without a guaranteed timetable – to an F1 race seat on hold?

Surely he was ready for more FP1 series soon? Why would he turn his back on it? Has Piastri’s recent form spooked him? Does he think Hamilton and Alonso will stay until they are 50, so Norris will stay put?

A move to McLaren would mean a switch from Honda power to Chevrolet. An insignificant detail? Maybe not. Ganassi is known to have offered Palu a much-improved salary going forward, with some speculating an outrageous figure that would make him the series’ highest-paid driver by a long shot.

As much as we know that “Chip likes winners,” he’s also known to be a very shrewd customer and not prone to showering his cash.

Chip Ganassi Racing Honda logo

Photo: Michael L. Levitt / Motorsport Images

Part Three: Bear with us while we play some 3D chess, but maybe Honda is behind it all? In 2026, it makes an undisclosed return to F1 with Aston Martin Racing – despite its engines currently dominating – but has a problem in the shape of Alonso.

Of course, saying he has regretted his ‘GP2 engine’ comments and has raced in the Indy 500 with Honda power. Honda Racing Corporation president Koji Watanabe also said: “If we want to work with Alonso again, as our driver, we have absolutely no objection to him driving.”

But talk is cheap. Alonso is said to have been vetoed by Honda to return with Andretti Autosport at Indy in 2020. Furthermore, Alonso will be 40 in 2026, so time is running out on his quest for a third F1 title with Aston anyway otherwise.

He has Honda and maybe Lawrence Stroll who is known for showering cash when he wants results, identified Palou as Alonso’s succession plan? Is that the lure that lured him away from McLaren – despite all the hype he’s about to get for it? Meanwhile, with the change of IndyCar titles and Indy 500 shots?

One thing is certain, Palou has established himself as the standout driver in the IndyCar field. The way he dominated this year, just as he stunned us in 2021, proves he has the ability to perform at the highest level.

But it looks like he won’t be doing that for McLaren after all… unless there’s another twist in this saga!

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