You couldn’t make this up, because if you did you’d simply get laughed at. Just over 12 months after his contractual future between Chip Ganassi Racing and McLaren blew up, a second explosion has been detonated by the likely two-time IndyCar champion.
After final practice at Indianapolis on Friday evening, a letter from McLaren Racing chief executive Zak Brown to his employees was leaked. The contents were jaw-dropping, as it revealed Palou had “no intention of honouring his contract” and that this had come in spite of him already receiving an advance on his salary for 2024.
It read: “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.”
Brown also pointed out the “time, money and resources preparing to welcome Alex into our team because we believed in him and were looking forward to IndyCar wins with him”.
This was underlined by Palou’s (now former) management company – with released its own statement: “Monaco Increase Management is bitterly disappointed to learn about Alex Palou’s decision to break an existing agreement with McLaren for 2024 and beyond. Together, we had built a relationship that we thought went beyond any contractual obligation and culminated in winning the 2021 Indycar crown and tracing a path to F1 opportunities.”
Apparently, it had been working with Palou right up until Wednesday of last week – even planning his championship celebration at Laguna Seca! – when he dropped the bombshell.
Then Chip Ganassi struck back with a statement of his own: “Anyone that knows me knows that I don’t make a habit of commenting about contract situations. Subsequently, I have been quiet since day one of this story but now I feel I must respond. I grew up respecting the McLaren team and their success. The new management does not get my same respect.
Alex Palou, McLaren, on the pit wall
Photo by: Mark Sutton / Motorsport Images
“Alex Palou has been a part of our team and under contract since the 2021 season. It is the interference of that contract from McLaren that began this process and ironically, they are now playing the victim. Simply stated, the position of McLaren IndyCar regarding our driver is inaccurate and wrong; he remains under contract with CGR.”
Palou himself remained tight lipped. He gave no television interviews on Saturday, but was seen accompanied by his previous agent Roger Yasukawa. When The Indy Star’s Nathan Brown cornered him on the pre-race grid, he gave a “no comment” to all the questions surrounding his future and whether he’d already been paid by McLaren for 2024.
What happens next?
Autosport understands that Palou signed a McLaren contract in July 2022 that runs through 2026. Of course, following the legal action that Ganassi took last year, through a mediation process it retained his services for 2023.
But this allowed Palou to take up a Formula 1 reserve driver role with McLaren, that included an FP1 outing at the United States Grand Prix and three runs with its TPC (testing of previous cars) program at Barcelona, the Red Bull Ring and the Hungaroring – at the latter sharing the running with race driver Oscar Piastri.
It’s also understood that the terms of his deal on the IndyCar side, which was delayed until 2024 by last year’s mediation settlement, would mean he was contracted to drive for Arrow McLaren for the following three seasons, with an option on its side to pull him through to its F1 race team if an opportunity arose. That was not beyond the bounds of reason, given Lando Norris’s impressive results and, for example, the ages of Lewis Hamilton and Fernando Alonso and their potential for retirement in a few years’ time.
The only guaranteed outcome of Palou’s notification to McLaren that he won’t join them next year is legal action on its part. Whether that’s to force him to join and honour the contract, or merely seek compensation for the U-turn, only time and a courtroom judgement will tell.
The awkward truth, however, seems to be that Palou 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 that he’s apparently pledged his future to is the same one that took him to court last year is simply staggering in itself.
Alex Palou, McLaren MCL36
Photo by: Sam Bloxham / Motorsport Images
One paddock insider mused: “A really great driver has screwed his own brand by doing this and he’d better get used to driving for Chip for the rest of his career!”
While Ganassi claims that McLaren is “playing the victim” – having sparked this whole scenario last year – Palou has been able to skirt any blame… until now. His demeanour outside of the car helps here: he’s very polite, easy to deal with, and always answers your questions, even if he has to swerve their content sometimes.
But now, as his flat “no comment” responses show, the spotlight is front and center on him – he has to own his actions of the U-turn on this one. I’m not sure he can pin this one on being badly advised, as he’s seen at first hand the commotion this kind of thing causes.
So what’s really changed?
There’s a couple of strands you can weave together to attempt to explain why Palou has opted for another summer of contractual pain and likely lawsuits.
Strand one: Chip Ganassi Racing is the best IndyCar team on the grid. Truth accepted. If he wants to win a third IndyCar title next year, there is no better place to be. And if he’s as determined to win the Indianapolis 500 as I think he is, then staying put with a crew he’s gelled with literally since weekend one in 2021, when he won first time out at Barber, makes sense.
But… Arrow McLaren’s Indy 500 efforts have been stout over the past two years. Granted, it hasn’t won an IndyCar race this season, but only due to the plenum chamber of Pato O’Ward’s Chevy engine hiccupping when he was poised to win at St Petersburg. IndyCar has two giants in Ganassi and Team Penske, but McLaren is hellbent on making it a trio and has invested heavily in doing so.
Strand two: The elephant in the room here is Formula 1. We know Palou has ambitions in this direction, and his eyes light up when you discuss his McLaren runs so far. So why would he turn his back on an opportunity that gives him a direct route – albeit one without a guaranteed timeline – to an F1 race seat in waiting?
Patricio O’Ward, Arrow McLaren Chevrolet and Alex Palou, Chip Ganassi Racing Honda
Photo by: Geoffrey M. Miller / Motorsport Images
Surely he was set for more FP1 runs shortly? Why would he turn his back on that? Has Piastri’s recent form spooked him? Does he think Hamilton and Alonso will stick around until they’re 50, so Norris will stay put?
A move to McLaren would mean switching from Honda power to Chevrolet. An insignificant detail? Perhaps not. Ganassi is known to have offered Palou a much-improved salary going forwards, with some speculating an outrageous number that would make him the best-paid driver in the series by a long chalk. As much as we know ‘Chip likes winners’ he’s also known to be a very shrewd customer and not prone to showering his cash around.
Strand three: Bear with me while we play a little 3D chess, but perhaps Honda is behind all this? In 2026, it makes an overt return to F1 with Aston Martin Racing – despite its motors dominating right now – but it has an Alonso-shaped problem.
Of course, he’s gone on record saying he regrets the “GP2 engine” comments and has raced at the Indy 500 with Honda power. Honda Racing Corporation president Koji Watanabe has also said: “If we are to team up with Alonso again, as our driver, we have no objections whatsoever in him driving.”
But talk is cheap. Word is that Alonso was vetoed by Honda from returning with Andretti Autosport at Indy in 2020. Plus, Alonso will be in his mid-40s in 2026, so the clock is ticking on his quest for a third F1 title with Aston anyway.
Has Honda, and perhaps Lawrence Stroll who is known for showering his cash when he wants results, identified Palou as its Alonso succession plan? Is this the lure that’s enticed him away from McLaren – despite of all the flak he’s going to take for it? With the fallback of sweeping up IndyCar titles and Indy 500 shots in the meantime?
One thing is for sure, Palou has established himself as the standout driver in the IndyCar field. The way he’s dominated this year, just like he stunned in 2021, proves he’s got the capability to perform at the very highest level. But it looks like he won’t be doing that for McLaren after all… unless there’s another twist in this saga!