Palou vs. Ganassi, Piastri vs. Alpine
Right now, top-flight single-seater racing news in the USA and the rest of the world is being dominated by contractual disputes involving drivers.
In Indycar, Chip Ganassi Racing (CGR) is suing one of its drivers, Alex Palou, for breach of contract after they announced on July 12th that he had extended his contract with them to the end of 2023, and Palou responded “No, I never agreed to this”. Palou and his management believe that he has a signed agreement with McLaren, although it is not clear what racing series he will be driving in in 2023, since McLaren co-owns an Indycar team, and owns a Formula 1 team and a Formula E team. Several hours after Ganassi’s announcement, McLaren announced that it had signed Palou for 2023 and beyond. However, the press release carefully avoided mentioning which series Palou would be driving in.
Palou, it must be mentioned, is the current Indycar series champion, having won the title last year driving for Ganassi in his second season in the series. So we have a championship-winning team suing its championship-winning driver. Not a common occurrence.
In Formula 1, following the shock news that Fernando Alonso is leaving Alpine to join Aston Martin for 2023 and beyond (replacing Sebastian Vettel, who is retiring), which was announced on August 1st, Alpine announced that its reserve driver Oscar Piastri, would be racing for Alpine in 2023, replacing Alonso. To which Piastri immediately responded “I have not signed for Alpine, and I will not be driving for them in 2023”.
It is widely believed that Piastri and his management have been in talks with McLaren about Piastri joining the team, presumably replacing Daniel Ricciardo, who is not performing at the same level as Lando Norris.
Both situations are messy. In the case of Palou and Ganassi, CGR has sued Palou in Marion County District Court (the court handing civil matters in the county in Indiana where CGR has its headquarters). Palou’s lawyers have applied to have the case moved to Federal court, which, if granted, may slow down its progress, and more awkwardly, force Ganassi to reveal more details of the contracts that lie behind the lawsuit claims. (Palou’s lawyers have also hinted that Palou may file counter-claims in the case).
The main issue in this lawsuit may be whether Palou’s contract with CGR contains any sort of “out” clause that would allow him to leave to join a Formula 1 team. Some racing contracts in lesser series have an “out” clause allowing a driver to leave if he is offered a drive in Formula 1. This is entirely dependent on the detail wording of the contract, since the contract might have an “out” clause for Formula 1, but it might only apply if Palou is going to be a full-time driver for McLaren. A test driver role, for example, might not qualify to trigger the clause.
In the case of Piastri and Alpine, the main issue, if Piastri has signed an agreement with McLaren, is that Daniel Ricciardo signed a 3 year contract with McLaren for the 2021-2023 seasons. The contract has no get-out clause on the team’s behalf, but it has an option on Ricciardo’s side for the 2023 season. So, if Ricciardo has already exercised the option, which he would be a fool not to do, he is contractually bound to McLaren for 2023, and if McLaren wants another driver to replace him, they will either have to buy out his contract, or sell his contract to another team (which might also require his express consent, depending on how the contract is worded).
The big backdrop to the Piastri-Alpine dispute is that many option contracts and pre-contracts in Formula 1 expire on July 31st. Teams want to have their drivers locked down for the following season as soon as possible, in order for them to do other commercial deals before the next season commences, and drivers whose current teams may be terminating or not extending their contracts also need to know in time what will happen so that they can look for other opportunities.
What is generally believed is that Fernando Alonso was negotiating a new contract with Alpine, but he had not signed it, because he wanted a multi-year deal, while Alpine was only prepared to offer him a 1 year deal. The insistence on a 1 year deal apparently came from Alpine CEO Laurent Rossi. Alonso’s contract had an exclusivity clause that expired on July 31st, after which time he was free to talk to other teams.
Alpine has had Oscar Piastri under contract for some time, and supported him in the lower formulae. Piastri is reckoned by many people in the sport to be a once-in-a-generation top-flight driver, and his performances of winning both an F3 series and an F2 series in his first season in both certainly suggest that he is highly talented. Alpine had Zhou Guan Yu under contract, but lost him to Alfa Romeo at the end of last year, because they could not offer him any Formula 1 seat. They did not want to lose Piastri the same way.
Piastri’s contract with Alpine also is rumored to have had an exclusivity clause that expired on July 31st. Piastri’s manager, Mark Webber, has been in talks with other teams for a while, trying to find a drive for him next year. Basically, it has been clear all along that if Alpine could not find Piastri a drive in F1 next year, he would become a free agent and any team could sign him. Normally a manufacturer team like Alpine would do a loan deal to another team for 1 or 2 seasons. However, many teams are not keen on taking a driver on loan only to have to give him back after he has spent 1 or 2 seasons honing his craft. Piastri was also not keen on a loan deal to a back-of-the-grid team where he might not be able to show his talent to the full.
There is an additional complication that Alpine/Renault does not have any customer teams. In the past, manufacturers would loan a driver to a customer team, often paying his salary and offering the B team a discount on powerplant supply. Alpine does not have that option available.
Up until last week, the most likely outcome was for Alonso to agree to the 1 year offer from Alpine (which was also rumored to include a clause guaranteeing him the lead driver role in the Alpine WEC car project after 2023), with Piastri being loaned to another lower-tier team for 1 season to allow him to gain experience, possibly Williams or Haas. Alonso had no other options with any other team, and his track record of acrimonious splits with teams has left him with the image as a difficult person to deal with.
Then…Sebastian Vettel announced his retirement on 27th July. That changed everything.
Suddenly, a potentially top-flight team with a wealthy, ambitious owner was on the phone to Fernando Alonso, offering everything that Alpine were not offering – a multi-year contract for a start, and a salary that was rumored to be higher than any salary that Alpine was prepared to offer. (Rumor has it that Esteban Ocon’s salary rises next year as part of an escalator clause in his contract, and the salary that Alpine was offering Alonso for 2023 was less than Ocon’s 2023 salary).
Alonso, a man for whom pride and ego plays a big part, suddenly felt wanted and needed in a way that Alpine were not signalling. In his mind, Alpine wanted to underpay him, then rapidly pension him off and send him to sports cars. Aston Martin wanted him to drive in F1 as long as he wanted to. Big difference.
Legally, Alonso could not sign anything until his exclusivity clause with Alpine expired at midnight on July 31st. But within a few hours after that, Aston Martin announced that Alonso had signed a multi-year deal with the team.
However, at exactly the same date and time, Oscar Piastri’s exclusivity contract with Alpine also ended. He was free to negotiate with other teams, and it just so happened that another team (believed to be McLaren) was very interested. Seeing Piastri as a generational talent, they offered him a contract.
Alpine’s announcement that Piastri would be driving for them can be seen as a throw of the dice. The team, caught entirely unawares by Alonso’s decision to sign for Aston Martin, needed a replacement, and what better than the driver that they have been supporting to get into Formula 1?
However, Piastri’s categorical insistence that he will not drive for Alpine in 2023 is a powerful indication that he has already signed to drive for another team. If the Alpine exclusivity clause in the contract had expired, it is possible that Alpine has no legal recourse. In which case they are left with a vacant seat for next season. If Alpine was unable to commit to Piastri, because they still wanted to have Alonso in the team for 2023, they might have been stringing him along to the point where he lost patience and confidence in them, and signed an option deal with McLaren, to be triggered after 31st July.
Now…if that happened, then things get murky if there was an exclusivity clause attached to Piastri’s contract with Alpine. If Alpine could, for example, show that Piastri and/or his management were negotiating with McLaren in advance of 31st July, when the contract forbade it, then they would have a case against McLaren for tortuous interference, as well as Piastri for breach of contract. However, I doubt that is the case. It has been an open secret for months that Piastri’s management have been trying to find him a formula 1 drive for 2023. They probably already banged on every team’s door a long time ago.
At the same time, 3 into 2 will not work at McLaren, at least not next season. With Daniel Ricciardo essentially unsackable, McLaren will either have to buy out Ricciardo’s contract, find him a seat acceptable to him in another series (i.e. Indycar or Formula E), or trade his contract to another team, if they want to slot Piastri into a race seat for 2023.
One big unknown is whether Ricciardo’s contract contains offset language. If (to use an example) he is being paid $10m by McLaren, and McLaren terminate his contract, and there is offset language in the contract, and he signs a contract with another team for $8m, McLaren would only owe him $2m, because the new team would be paying him $8m of the $10m that McLaren would otherwise owe him in 2023 under the terms of the contract. Absent any offset language, Ricciardo could potentially “double dip”. He could collect the money owed for his McLaren contract in 2023, sign with another team AND get paid by them. Assuming he can find another team willing to sign him at this late stage.
Alpine now has a driver vacancy…
The fact that Mclaren is a suitor for the services of both Alex Palou and Oscar Piastri is probably not a coincidence. Zak Brown, the CEO of McLaren Racing, is ambitious to build up all of the three single-seater teams. McLaren formally enters Formula E next season, when it takes over the Mercedes Formula E team, Arrow SPM McLaren is expanding to 3 cars next season, and Colton Herta has tested with McLaren this season in a 2021 car.
UPDATE – This morning’s addition to the rumour mill is that the contract Piastri has signed with McLaren is for a reserve driver role in 2023, with him becoming a race driver in 2024 and beyond, after the expiry of Daniel Ricciardo’s contract. This is logical from a financial point of view, given the costs that McLaren would likely incur if they terminated Ricciardo’s contract a year early, but the rumour makes little sense from an overall strategy perspective. Alpine would have been extremely keen to have Piastri also continue in a reserve role for 1 year while Alonso saw out his contract, so he was not going to be racing for Alpine.
The only part of the rumor that makes sense is that Alpine planned to loan him to Williams for 2023, and Piastri and his manager felt that was not going to be good for him. However, any racing experience is better than watching from the garage. George Russell was loaned from Mercedes to Williams for 2 seasons, rapidly acquired the nickname “Mr. Saturday” because of his consistent ability to extract the maximum from a mediocre car in qualifying, and is clearly ready to race at the sharp end in 2023 for Mercedes. Being loaned to another team certainly did not hinder him.
UPDATE 2 – The case filed by Ganassi against Alex Palou is now headed for Federal court.
UPDATE 3 – A lot of people seem to think that the Alpine mess with Alonso and Piastri is somehow the fault of Otmar Szafnauer. This is unlikely. Fernando Alonso was apparently negotiating his contract directly with Alpine CEO Laurent Rossi, and it is therefore safe to assume that the same was occurring with Oscar Piastri. Szafnauer, like the rest of the Alpine team, found out that Fernando Alonso had signed for Aston Martin when he read that team’s press release on the Monday morning.
There may be issues with Rossi’s leadership style. Since he became Alpine CEO, three senior leaders – Marcin Budkowski, Cyril Abetiboul, and Alain Prost, have left the team. Alpine also lost Zhou Guan Yu to Alfa Romeo last year when they were unable to offer him a race seat. There is an emerging pattern that suggests strongly that Rossi does not really understand or respect top-flight racing team culture.
UPDATE 4 – It now seems that McLaren intends to replace Daniel Ricciardo with Oscar Piastri in 2023, and has already commenced talks with Ricciardo’s management to buy out the remainder of his contract.
This explanation from Dieter Rencken shows that Piastri probably signed a McLaren contract before Alonso signed for Aston Martin.
UPDATE 5 – Adam Cooper, writing in Motorsport, explains the events that have unfolded. Included in the article is the revelation that a deal had been agreed for Piastri to be loaned to Williams, with a Renault powerplant deal as part of the arrangement. So the signing of Piastri to Mclaren has pissed off not only Alpine, but also Williams. Alpine would have gained a B team, which they currently lack, which would have increased their influence inside the sport. The relationship between Piastri and McLaren had better work, or his management may live to regret the move.
UPDATE 6 – The Contract Recognition Board ruled in favor of Oscar Piastri, which ultimately led to the departure of a senior Renault/Alpine legal executive last November. It was clear from the CRB hearing that no attempt had been made to sign Piastri to any binding driving contract for 2023. Only vague and non-committal noises had been made informally by Alpine about signing him to a race seat, and the offer of a drive at Williams for 2023 and 2024 had been proposed, but rejected by Piastri and his management. Piastri was therefore a free agent for 2023 and beyond at the time that McLaren signed him.
The Ganassi – Palou dispute has been resolved with Palou remaining at Ganassi Racing for the 2023 season. There was no real “out” clause that would have allowed him to leave the team. It appears that his contract has been revised to permit him to test for McLaren in F1 in 2023. Palou’s primary sponsor may move to Arrow Mclaren SP with him in 2024.