Why Palou’s latest contractual firestorm is different to last year’s

Another year, another lawsuit. Another end-of-season stretch of nonsense. Another turn of our attention to off-track matters that have nothing to do with celebrating the close to an amazing championship run.

I don’t know how much of an advance 2021 and almost-2023 IndyCar champion Alex Palou took from McLaren for the services he won’t render in 2024, but I’m confident he’ll be returning those funds. And I don’t know how much financial pain McLaren will inflict on Palou in its U.K. lawsuit, but it will be significant if the court sides with the team.

Palou didn’t like his circumstances at Chip Ganassi Racing in 2022, so he caused a massive disruption within the team and engineered an exit plan with a revised contract that would allow him to leave for McLaren at the end of 2023. More recently, he didn’t like the circumstances waiting for him at McLaren, and deployed the same playbook to cause a contractual disruption and stay with Ganassi.


And unlike last time, there are some real consequences to face.

A few messages will be sent by McLaren throughout the latest round of drama created by Palou. Money is at the core of McLaren’s lawsuit, but let’s be clear: There’s no dollar amount Palou could be ordered to pay that will have a meaningful impact on the 60-year-old racing team. McLaren could win a judgement for $5 million or $25 million, and in both instances, the money would qualify as pocket change for one of racing’s richest organizations.

Yes, money is expected to flow from Palou’s account to McLaren’s, but it’s the manner and the duration of that extraction where I anticipate the main message will be delivered. This is about the cost of disloyalty.

Wesley Snipes’ character Nino Brown had a famous line in the movie New Jack City where the gangster, while referencing the dirty deeds he commits as a byproduct of his chosen profession, said, “Always business, nothing personal.” I couldn’t help but think of that line in relation to the McLaren and Palou situation, but in reverse. On the surface, everything about McLaren’s lawsuit is strictly business, but we know this is 100 percent personal.

What we have with Palou’s newest move is one that has enraged and embarrassed a proud team, and if I had to guess, McLaren’s lawyers will practice a blend of patience and vigilance in their pursuit of financial justice. And while Palou could offer to settle quickly and pay a sizable amount of money to McLaren, a rapid settlement may not be what the team is after.

We don’t know what Palou is currently making or is due to make in the coming years, but top IndyCar drivers today are commonly earning $2-4 million for a season of work. Last year’s legal drama between Palou, McLaren, and Ganassi was said to generate legal bills in the hundreds of thousands of dollars on both sides after approximately two months of intense action, which is scary.

If McLaren wants to play the long game and let its wrath be felt by pushing for this case to stretch into 2024 and beyond, Palou could see most of his current and future earnings lost in legal fees in a protracted fight against a giant team with unlimited funds. And those losses would come before a court decides if he should pay McLaren a steep seven- or eight-figure sum in damages that could easily cost him his income, house, cars, and whatever else might be needed to satisfy the debt.

Again, this has the potential to become scary for the 24-year-old, and unless someone steps in to cover Palou’s legal fees, this could have a devastating effect on his financial stability. Depending on the size of a potential award to McLaren, we could see the monies paid by Ganassi to Palou to drive go out the door to McLaren, which would probably make McLaren CEO and self-avowed Ganassi antagonist Zak Brown incredibly happy.

The other, more lasting message to impart through McLaren’s aggressive legal pursuit of Palou is a warning shot to other drivers or key personnel who might want to ‘pull a Palou’ by trying to wriggle out of their contracts. I know of a few teams who saw what transpired last year with Palou and sought to revise any areas in their key contracts that would embolden their people to emulate his behavior, and I’d have to imagine more contractual steps have been taken in any new deals to include brutal penalties for failing to honor every aspect of the agreement.

The only way I can see this contretemps coming to an expedited end is if IndyCar series owner Roger Penske steps in and sends a message of his own to McLaren. Every team, including his own, competes in IndyCar at Penske’s discretion, and while McLaren may have a perfectly valid and supremely winnable lawsuit to pursue against Palou, I do wonder if Penske will call and make it plain that he does not want months or years of negative headlines overshadowing IndyCar’s progress and resurgence.

Penske can politely decline any team’s entry for 2024, and that’s a powerful piece of leverage.

I’m happy for Palou in one way, and that’s in staying with the amazing group of people who’ve made all of his success possible. To start, crew chief Ricky Davis has kept the No. 10 Ganassi Honda together amid all the divisive spectacle created by his driver. Team manager and race strategist Barry Wanser has also helped the No. 10 crew to survive Palou’s storms and deserves to be rewarded for it by going for more wins and championships. And the same notion applies to Ganassi technical director and No. 10 race engineer Julian Robertson, whose quiet ability to get the most out of Palou while giving him excellent cars to drive at most rounds is remarkable.

In three short years, Robertson and Palou have become the most effective combo in the series, and that’s worth preserving. And now we’re on the clock to learn more about how the McLaren lawsuit will play out and if Penske will make his presence felt in the matter.

And we’re also on a longer clock to see if Palou demonstrates loyalty in some significant way to Ganassi. If he becomes dissatisfied with something or feels he has a chance to drive in another series or could do better at a different team, will Palou whip out that playbook in the next year or two and drive another wedge between himself and the team, contracts be damned?

Your guess is as good as mine.

Story originally appeared on Racer