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The long-running legal dispute between McLaren, Alex Palou and Chip Ganassi Racing has taken a remarkable final twist with a settlement between the relevant parties and Palou backtracking on his criticism of McLaren in court.
In January, the UK’s High Court awarded McLaren in excess of £12million for the lost revenue incurred after Palou breached a contract to join McLaren’s IndyCar team and be an F1 test and reserve driver, to remain with Ganassi in IndyCar instead.
Ganassi indemnified Palou in those proceedings so was liable for that award while legal fees - which McLaren was successful in getting covered - would have taken that to over £20m.
An astonishing joint statement shared on Friday by both IndyCar teams and the four-time series champion himself issued what is effectively an apology, with Palou saying: "McLaren and Zak supported me in many ways, they fulfilled every obligation, went above and beyond and delivered on everything they said in their contracts.
"I was never misled by McLaren and I very much respect their organisation.”
The saga has run since August 2022, when Palou announced he was leaving Ganassi's IndyCar team for McLaren, only for Ganassi to argue he could not contractually do so, meaning the McLaren move was deferred to 2024.
Palou then changed his mind again a year later and prompted the action from McLaren by deciding to remain at Ganassi after all. The realism, or otherwise, of his chances of transferring to Formula 1 with McLaren and how big a part that played in their talks has been disputed through the court process.
Palou now says he was "pulled in various directions" and "had the wrong people around me" during that period.
McLaren Racing CEO Zak Brown and eponymous team owner Chip Ganassi were "put in a difficult position, and I regret being in the middle of that", Palou acknowledged.
In somewhat of a shock given their teams’ frosty relationship during this period, Ganassi used his statement to thank Brown "for now giving us a chance to leave this matter behind us", while Brown expressed relief that the matter was resolved.
Confirming the final settlement had been made, Ganassi had a strongly worded warning for Palou - who will begin his latest title defence with Ganassi’s team this weekend in St Petersburg - as part of his statement, too.
"I hope Alex has learned it's important to keep good people around him, which he now does, so the events of 2023 are never repeated," Ganassi's statement read.
The Race says
Scott Mitchell-Malm
The details of this settlement will be kept private but it is understood that McLaren still demanded a significant portion of the sum awarded by the High Court plus its legal fees covered – and the strength of this statement, with Palou backtracking and Ganassi also condemning his actions, means it was obviously part of the deal too.
Financially, it means Palou - and in turn Ganassi given the indemnity - will still be on the hook for a fee well in excess of $10million. And how exactly this gets covered is interesting to consider.
Despite its success Ganassi is not an organisation that could have easily afforded to cover $20million+ as it would have needed to pre-settlement. That will also go for this revised amount. It will likely have needed assistance, and/or to recoup the funds another way.
Palou’s already acknowledged in court that he is earning a reduced base salary at Ganassi, with which he breached contract previously. He also predicted this would continue to be the case going forward, with the price for his indemnity understood to be a revised, reduced multi-year contract.
In other words, Ganassi picks up the tab now, but will get some/most of it back in a roundabout way by paying Palou less than a four-time champion’s going rate would be over the next few years.
What the consequences of that could be is fascinating to consider.
Ganassi’s obviously not thrilled with its driver’s conduct. To have to come out publicly and say it does not condone Palou’s behaviour - having stood by him until now - and hopes Palou has learned to keep good people around him, means its support is qualified at best. On some level it has had to agree to throw Palou under the bus to negotiate a better settlement.
With Palou committing multiple breaches in recent years Ganassi must have doubted how much its driver can be trusted. Now that driver has cost it a fortune through a damaging, lost court case. That’ll cause some strain.
And what about Palou’s side? How will he truly feel about sacrificing his most lucrative years, earning only so many cents on the dollar? Might he have thought on some level that Ganassi’s indemnity was a genuine free pass?
If he has sense, he will recognise the debt he owes Ganassi, though this runs deeper than just money. Through this process Palou has made several poor, self-defeating decisions – whether through being badly-advised by those around him, his own naivety, or most cynically a lack of conscience.
So what might a forced, long-term commitment on unfavourable terms do to a driver who just lost in court for backing out of what he argued was a forced, long-term commitment on unfavourable terms?
For now, this remains IndyCar’s most potent force. It would surprise nobody if the off-track turmoil was immediately replaced by more on-track success. The legal side of the saga is finally over.
What’s most interesting is how it impacts the dynamic longer-term after one of motorsport’s most successful partnerships – which should be indisputably strong – has been dragged through such an astonishing, unprecedented ordeal.
