McLaren boss tells team IndyCar championship leader Alex Palou has reneged on 2024 contract

Alex Palou, of Spain, sits in his pit box during a practice session for the IndyCar Indianapolis GP auto race at Indianapolis Motor Speedway, Friday, Aug. 11, 2023, in Indianapolis. (AP Photo/Darron Cummings)

The contractual saga surrounding IndyCar championship leader Alex Palou took another twist Friday when the head of McLaren Racing told his team the Spaniard has "no intention of honoring his contract" with the team next year.

In a letter sent to Arrow McLaren Racing employees by boss Zak Brown, a copy of which was obtained by The Associated Press, Brown wrote that Palou had given him multiple assurances he'd be wearing papaya in 2024 and has already received an advance on his salary.

"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 wrote.

The management firm that negotiated Palou's contract with McLaren last year expressed its own disappointment in Palou's latest change of mind.

"Monaco Increase Management is bitterly disappointed to learn about Alex Palou's decision to break an existing agreement with McLaren for 2024 and beyond," the firm said in a Saturday statement. "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. Life goes on and we wish Alex all the best for his future achievements."

Palou's current IndyCar boss, Chip Ganassi, responded with a terse statement that's out of character for the longtime Chip Ganassi Racing owner.

"Anyone that knows me knows that I don't make a habit of commenting about contract situations," Ganassi said. "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 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."

It was public knowledge through the F1 paddock that MIM was shopping Palou to F1 teams this summer as his deal with McLaren had an out that would release Palou for an F1 seat in 2024 if he found one by July 1. At Indianapolis on Thursday, Palou told reporters he had nothing lined up in F1.

Palou started eighth at the Indianapolis road course Saturday and was involved in a first-lap pileup that also included two-time series champ Josef Newgarden, who is second in points. Both drivers were able to continue racing.

Brown said last month that Palou would join McLaren on a full-time basis as its F1 reserve driver as soon as the IndyCar season ends in September. Palou has already had several testing sessions in the McLaren F1 car.

Brown's letter to McLaren employees went out shortly after Friday's final IndyCar Series on-track session at Indianapolis Motor Speedway. Palou holds an 84-point lead over Newgarden with four races remaining this season.

Palou upended the free agent market last year when he publicly rebuked Ganassi's attempt to pick up a contract option for 2023. Palou said he instead was joining both McLaren's IndyCar program and had a Formula One contract.

Palou went public with the Ganassi dispute in a series of social media posts and wrote "as I have recently informed CGR, for personal reasons, I do not intend to continue with the team after 2022."

McLaren then immediately announced Palou's hiring with its own social media post that began: "¡Hola Alex!"

The social media posts became a bit of a joke in the racing world as drivers from other series began using Palou's wording to update their own free agent status.

Ganassi, though, wasn't laughing.

He fought the defection and the sides settled through mediation with Palou remaining in IndyCar with Ganassi this year, but testing as a reserve driver for McLaren on his off weekends. He was in full McLaren papaya-colored gear at the Miami Grand Prix in May, and Palou was wearing one of the custom Richard Mille watches designed only for McLaren F1 drivers.

Brown's letter to his team did not indicate what Palou plans to do in 2024, when he is already contractually bound to McLaren. Brown and Ganassi are bitter rivals -- Brown even paid Palou's legal fees in his fight to get out of the Ganassi deal.

Palou is currently closing in on his second IndyCar title in three years driving for Ganassi. But the 26-year-old Spaniard has long held F1 ambitions.

"We dedicated a lot of 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," Brown wrote. "Coming out of his team dispute last fall, we were assured by Alex of his commitment to Arrow McLaren reflected in the contract he entered into with us."

Brown said he has been reassured by Palou multiple times since the Indianapolis 500 in May that he would be with McLaren next year. Because of those promises, Brown wrote "we have paid him a significant first payment toward his 2024 season in addition to the millions of dollars toward developing him in our Formula 1 testing program and in his reserve driver role with a potential drive in F1 in the future."

Brown wrote that McLaren expects Palou to honor his contract with the team, but will pursue 2024 driver lineup possibilities as the dispute is settled. McLaren currently fields IndyCar teams for Pato O'Ward, Felix Rosenqvist and Alexander Rossi.

"Unfortunately, it now appears our belief, commitment, investment and trust in Alex was misplaced as it is not being reciprocated," said Brown, who will confer with his IndyCar team leadership on its future plans.

The team was in discussion of adding a fourth car once Palou joined in order to keep Rosenqvist on the roster. Rosenqvist has lived in limbo the past year as his future with McLaren has rested with Palou's decisions.