Court documents from the lawsuit between 2021 IndyCar champion Alex Palou and his Chip Ganassi Racing team have emerged.
Ganassi agreed to end the court case over Palou’s bid to leave for McLaren early, so there’s no ultimate ruling by the court, but the documents issued from the case offer an insight into the events that unfolded to create one of the biggest motorsport stories of the year.
Included in the documents released is a redacted version of Palou’s contract with Ganassi, that reveals there is a period of exclusivity where Palou is not able to discuss contracts with other teams until September, 2023.
However, this does establish that, contrary to paddock sources’ information, Ganassi doesn’t have another option to extend Palou’s contract for 2024.
Palou will be free to choose which team he drives for once the exclusivity period ends in September next year.
That’s the headline news from the court documents which are over 150 pages in length. Here’s some additional detail from the documents.
Palou’s contract and the end of the case
It’s now clear that Ganassi dropped the lawsuit, “dismissing this action with prejudice” (meaning Ganassi can’t re-file the same claim in the same court again) in September.
Palou and Ganassi announced their plan to stay together for 2023 on September 14, with Palou receiving blessing to test Formula 1 cars with McLaren.
Pato O’Ward and Alex Palou are back at the wheel of the MCL35M in Austria later this week as part of our Testing of Previous Cars programme. pic.twitter.com/oLgEeovJlv
— McLaren (@McLarenF1) October 5, 2022
Palou, with his racing entity ALPA, signed a Driver Agreement and a Sponsor Agreement, effectively concurrent contracts with Ganassi, in 2020 when he joined the team ahead of the 2021 season. Both of these documents – although redacted in places – have been revealed in the court documents.
They clearly mark out the term of the contract and – while Ganassi has a provision to terminate the contract on performance grounds – there doesn’t appear to be any provision for Palou to end the contract himself.
Ganassi outlines as much in the court documents, adding: “Ganassi – not ALPA or Palou – has sole discretion to extend the Term of the Agreements into a third year, including based on its view of Palou’s performance.”
Palou’s lawyers appear to have offered little to explain why Palou’s contract with Ganassi and its subsequent extension were not binding or how it offered an exit for Palou to join McLaren – at least in the documents published.
Previously released court documents revealed Palou was hoping for a revised contract including a break-clause for a Formula 1 opportunity.
Palou contract ends in 2023, period of exclusivity until September
We now know through documents issued by the court that Ganassi held an option to extend Palou’s services through 2023. It has no such clause to extend again through 2024.
What we also didn’t know before these documents surfaced is that Palou has a period of exclusivity which initially ran until September 2022, and with the extension of his contract consequently now runs until September 2023.
Ganassi outlines in the court documents: “Palou agreed not to negotiate with third-parties during a specified portion of the Term.
“That is, under the Driver Agreement’s Section 1: “Until September 1, 2022, and, if [Ganassi] exercises its option to extend the Term through 2023, then until September 1, 2023, [Ganassi] shall have the exclusive right to negotiate with ALPA for [Palou’s] driving services and promotional rights beginning after the Term, and ALPA and [Palou] agree that they shall not directly or indirectly negotiate for or make any agreement to provide the professional services of [Palou] in any motorsports-related capacity after the Term with any third party until after such date.”
Rumours have circled that Palou has already agreed to join McLaren for 2024, but any announcement of that – if it is indeed true – would have to come after September 1, 2023 to avoid Palou being in breach of his Ganassi contract, unless this legal process has led to a change in that contract which is yet to be announced.
McLaren Racing CEO Zak Brown told a group of select media including The Race on Wednesday that he was open to expanding to a fourth car in 2024, and Felix Rosenqvist’s McLaren deal also comes to an end following the 2023 season.
That gives McLaren flexibility, but having to wait until September – very late in the silly season – to sign Palou is less than ideal.
What if Palou has a late change of heart and stays at Ganassi or is lured elsewhere? That will be a big story in the 2023/24 silly season.
On the Palou situation, Brown said: “Everyone’s reached an amicable solution.
“We’ve now had Alex in our Formula 1 car, as we have Pato [O’Ward]. That will continue in the future, which we’re quite excited about.
“At this point, we’re laser focused on 2023 and glad to have the noise behind us and just want to put our head down and get on with the job with the three drivers that we we have and get Gavin [Ward] settled in.
“You’ll continue to see Alex Palou in our Formula 1 car from time to time.”
Asked to explain about Palou initially supposedly signing a multi-year deal with the team, Brown added: “I don’t want to make any driver comments. I’ve spent the last three or four months doing that.
“Things will become clear in due course, I’ll just leave it at that [smiling].”
Something we still don’t know: What Ganassi gets out of this
This is an odd situation to unravel as the final decision of the court will not be forthcoming as Ganassi has dropped the case.
The ‘Request for Relief’ section, which effectively lists what the aggrieved party should get in return if it is to be successful in its case, gives us an idea of what Ganassi wanted from the proceedings.
In these multiple points were ‘recoverable costs’ and ‘any other relief that is just and proper’, but it’s still not really clear if Ganassi and Palou/ALPA agreed to these with the case being dropped, or the actual valuation of either.
For Palou, he appears to emerge a winner, based on the fact he gets to drive a potentially championship-winning IndyCar next year and then be free to decide his own future as he had wanted to for 2023.
Plus he’s already got his wish of testing F1 cars for McLaren. What isn’t clear is what he gave up to achieve this dream.
What we don’t know is what Ganassi achieves from dropping its case when it appeared to be in such a strong position.
Perhaps its goal was to keep a championship winning driver in its team when there aren’t obvious alternatives. But the counterpoint to that is it signed Palou himself from Dale Coyne, having not won a race or established himself as a top driver in his one year in the series. It could have made that gamble again on younger drivers on the market.
Perhaps among ‘recoverable costs’ and ‘any other relief that is just and proper’ – the details of both are absent from this document – was enough for Ganassi to call time. Or even the impact on its team and sponsors had become unbearable and a solution was the correct way to go to avoid jeopardising morale, and focus on next season.
Certainly, there’s still more to learn about the outcome of this situation that might not become clear for some time.
