When Jean Alesi entered Formula 1 in the middle of 1989 with Tyrrell, he sought three-time world champion Nelson Piquet’s counsel over what he needed to do to look more professional, so he’d fit in with the F1 Paddock. “Get a briefcase,” was Piquet’s sage advice, to which Jean replied: “But I don’t have anything to put in it.”
Fast forward to the following season, and his heroic feats with the tiny Tyrrell team earned interest from Ferrari, Williams and McLaren. In fact, Alesi had no fewer than four signed driver contracts in his possession in the summer of 1990. “At last!” he exclaimed. “I had something to put in my briefcase!”
In this respect, perhaps Alex Palou needs a briefcase intervention? He seems to collect lawsuits as well as mutually incompatible driving agreements. Over the last two years, his situation has been the most contractually turbulent in the public eye that I can remember since those Alesi/Ayrton Senna/Alain Prost/Nigel Mansell days of F1.
The awkward truth is that Palou has signed two different contracts for two different teams for the same series. Not only that, but he has also done it twice now! The fact that the team he’s pledged his future to is the same one that took him to court last year is quite staggering in itself.
He’s also effectively removed himself from having a potential shot at F1 in a couple of years’ time with a currently top-four team that owns his superlicence, which is lodged with the FIA’s Contract Recognition Board, having enjoyed runs in both its old and contemporary machinery.
As McLaren chief Zak Brown stated in August, in F1 “you need to hang around the hoop and see what opportunities are provided”. Heck, Michael Schumacher got his F1 break because Bertrand Gachot was imprisoned for spraying a London cabbie with CS gas!
Back to the case at hand: A commercial court judge in the Business and Property Courts of England and Wales will decide next year what damages McLaren is to receive following Palou’s U-turn last summer that breached both driving and promotional contracts he’d signed to race in the IndyCar Series and act as its reserve Formula 1 driver.
Legal documents that have been filed to the court from both sides have been reviewed by Motorsport.com, and they reveal that Palou is not disputing his breach of contract but is contesting the size of the damages that McLaren is seeking as recompense. In the Palou legal team’s defence document, it states: “The real issue between the parties is as to the quantum of any damages with the Defendants and liable to pay the Claimants as a result.”
It also reveals Palou’s given reason for the split was that he “lost trust and confidence” in what he believed was a promise of a future F1 race seat, something that McLaren counters as “baseless”.
McLaren opted against getting an injunction over Palou’s services but is seeking $23 million in damages from him. It claims lost revenues and expenses with regards to replacing him, the time spent testing its F1 cars, renegotiated contracts with sponsor NTT and a loss of funding from engine supplier General Motors, plus a $400,000 signing-on fee that was already paid to him.
A timeline of contractual drama
We must rewind to 12 July 2022 when Chip Ganassi Racing announced it had exercised its option on the 2021 champion’s services for the 2023 season, including a quote from Palou giving the usual re-signing platitudes. Shockingly, Palou then took to Twitter to state that he “did not intend to continue with the team” and did not “author or approve that quote”.
McLaren Racing then revealed that it had signed Palou to its driver roster for 2023, revealing that he’d also join its F1 test program. Sources at McLaren confirmed that he was genuinely in its reckoning for a future F1 race seat, especially with Daniel Ricciardo struggling and Oscar Piastri (who’d eventually get that drive) at that time signed with Alpine – which led to a subsequent contractual saga of its own.
On 26 July, Ganassi issued a summons on Palou – yes, that’s a team suing its own driver during his title defence! – insisting that taking up its option for a third season meant he couldn’t move to McLaren.
A couple of months later, a mediation settlement was agreed whereby Palou would stay with Ganassi in IndyCar for 2023 (when he claimed his second title) but be allowed to drive McLaren’s F1 cars in testing and practice sessions – most notably driving in FP1 at the 2022 United States GP – and he appeared at the 2023 Miami GP as its reserve driver.
All seemed settled on 1 October 2022, when Palou signed a new contract (plus a promotional deal and a link agreement) with McLaren to drive for its IndyCar team (effectively delayed until 2024) and continue to be a part of its F1 reserve roster.
On 9 January 2023, McLaren paid Palou a $400,000 signing-on bonus and provided him with “F1 Driver Support”. Although it was having to wait for his services in IndyCar for 12 months longer than planned, it ran him several times in F1 machinery to keep up its side of the deal.
McLaren had no reason to expect what occurred next…
Then it happened again!
On 8 August 2023, Palou’s lawyers Jonathan Hadaya and Adam Ross informed McLaren’s Brown that their client had entered a “new, multi-year contract with CGR”. In response, McLaren’s group legal director Tim Murnane (a veteran of dealing with driver contractual disputes between Ron Dennis and Ayrton Senna) sent a letter pointing out the “clear breach” and inquiring whether Palou would attend the upcoming Singapore GP and, two days later after no response, he issued them with a “Breach Notice”.
Palou’s lawyers responded to both on 21 August, stating that “a complete severing of the relationship [was] in order” because it said McLaren had “represented and/or promised to [Palou that he] would serve as a full-time F1 driver, and not only the reserve driver”.
McLaren’s solicitors responded to that latter, describing the suggestion that Palou had been promised a race seat as “baseless”.
Palou was a no-show for McLaren at the Singapore GP in the middle of September, and the legal process began in earnest.
What happens next?
Time will tell if Palou’s decision to remain with Ganassi continues his excellent IndyCar Series form, and delivers Indy 500 success on top of championships, or whether he’s made the worst mistake of his life in giving up a shot with an F1 team down the road.
His arrival at the Arrow McLaren IndyCar team would’ve made a great storyline, as it bids to join the powerhouses of Penske and Ganassi at the top of the table.
The most that Palou has said on the matter was ahead of his championship-crowning Laguna Seca weekend in September, stating: “The [McLaren F1] opportunity was great, but there was nothing else there saying, ‘Oh, you will have a car’. At the same time, if I was 20, maybe I would've waited.
“But I'm not 20, I'm 26. And on that side, I don't know if there's been somebody [aged] 30 getting into F1.”
The timing of his U-turn coincided with F1 rookie Piastri’s strong mid-season form, and who subsequently signed a new deal with McLaren through 2026.
Intriguingly, a source at McLaren has confirmed that if Lando Norris had suffered an injury in his big crash at Las Vegas last month, then Palou absolutely would’ve replaced him in Abu Dhabi last weekend – had their split not occurred.
So even if Alex had thought the Piastri/Norris combo would’ve barred him from an F1 racing opportunity until 2026 at the earliest (when Norris’s deal expires) what he did turn down was the kind of chance that serial reserve/test driver Nyck de Vries grasped with Williams at Monza in 2022 that led to his AlphaTauri shot this year, or the one that Liam Lawson got when Ricciardo was injured at Zandvoort a few months back.
It’s also understood that there was a mechanism in Palou’s contract that if another F1 team came in for him with a race offer, and McLaren couldn’t provide a seat, then he could leave.
When asked if he was surprised by McLaren’s lawsuit against him, Palou said: “I was expecting it. I mean, maybe not that way of like doing stuff. But yeah, I was expecting [it] sooner rather than later.”
One wonders how he then reacted when the news dropped that it was seeking a walloping $23 million in damages… Depending on how the judge rules, Palou might need to find a lot of money in his briefcase. Did he really think McLaren would take this lying down? And that’s before you consider the mutual dislike between Ganassi and Brown that adds some spice.
There’s little doubt that Palou’s form dipped in 2022 with that first lawsuit hanging over him, so how will this elevated level of uncertainty impact him going forward? I’m hearing it’s very unlikely that this case will be settled out of court, and that it might not be heard for over a year – which is a long time to fret about it.
McLaren is demanding its day in court, and has certainly set its bar high in terms of the damages its’s seeking, so expect yet more drama when the judge hears the case – whenever that might be…
PS: If you were wondering about Alesi’s contractual decision, he chose Ferrari over Williams for 1991, meaning seasons of heroic struggle rather than potential title-winning glory years.
