Analysis | Why Alex Palou renounces his move to Arrow McLaren

IndyCar championship leader Alex Palou has had another change of heart. A year after the (lost) court case for wanting to switch from Chip Ganassi to Arrow McLaren, the Spaniard is missing the opportunity to make the much-discussed switch. His prospect of a seat in Formula 1 - or rather the lack of one - is probably a primary reason for saying 'no' to CEO Zak Brown's team.

Of course, the letter would leak out. If Zak Brown notes on the letter towards all staff that Alex Palou has decided not to race for Arrow McLaren's IndyCar team in 2024 after all, then the American knows that the news will reach the media at short notice. From a PR point of view, a smart move.

After all, nothing has ever been officially communicated before about the final recruitment of the soon-to-be two-time champion for the next IndyCar season. This way, Brown can still let it be known that he is pretty angry, because he is. The CEO of McLaren referred to this in the letter - revealed by the news agency AP - to the million-dollar sum McLaren has already invested in Palou.

Soap of Ganassi, McLaren and Palou

This is the next chapter in a saga that has dragged on for a year. It all started the moment Palou and McLaren announced that the Spaniard would switch from Chip Ganassi Racing to Arrow McLaren. Ganassi pointed out to Palou that he had a watertight commitment for the 2023 season, AND the team had a clause to extend the contract for another year by 1 September 2023 at the latest.

The judge ruled in Ganassi's favour. McLaren and Ganassi then got around the table, and it was agreed that Palou could also be McLaren's test and reserve driver in Formula 1, in addition to his work with his own team. It was an open secret that, despite the clause, Palou would still move to Arrow McLaren after 2023.

Meanwhile, it is clear that Palou and his management had a verbal agreement with McLaren even before the deadline for Ganassi to lift the clause (i.e. 1 September 2023). There was apparently nothing on paper, according to Brown's letter. But Palou's advocates, Monaco Increase Management, believe there was an agreement with Arrow McLaren for 2023. A statement from the agency reveals that they stopped representing Palou with immediate effect on Saturday morning.

Management breaks with Palou

"Monaco Increase Management is bitterly disappointed to learn about Alex Palou’s decision to break an existing agreement with McLaren for 2024 and beyond. 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."

But why has Palou changed his mind? The most obvious reason is that the Spaniard has realised that the path to Formula 1 is not through McLaren. Palou has never made a secret of ever wanting to race in the premier class of motorsport. Driving in IndyCar for Brown's team and also getting test miles for the F1 team would be the quickest way for him to realise his dream, or so the thinking seemed to be a year ago. By now, though, it is clear that McLaren has a dream pair in F1 with Lando Norris and Oscar Piastri.

There will be no spot in that team in 2024 and 2025, with 2026 being the earliest season that the Spaniard could grab a possible seat at McLaren. Meanwhile, Palou would then race for McLaren's IndyCar team, which is currently not competitive enough. A podium finish here and there is possible, along with a possible sporadic victory. But a championship seems Palou can forget about beforehand. Moreover, if there is no prospect of a place at McLaren F1, what is the point of a transition.

Ganassi guarantee of success

Palou will probably opt for a longer stay at Chip Ganassi Racing, the team with which he will almost certainly win his second title this season. This also immediately closes the door on F1 teams other than McLaren. The leading Ganassi Racing will never allow a clause in the new commitment stating that Palou can still switch to F1 at any time. If Palou had wanted to go to F1 in the winter, he would have had to wait for what is to come - with the risk that nothing comes and that in IndyCar, the best seats have been taken.

Few seats will become available in Formula 1 for the 2024 season, as virtually all drivers are fixed for at least one more season. With his status, a place at Williams or AlphaTauri is far from attractive for Palou. At the latter, the Spaniard would have been in the picture, but Palou has no doubt, also seeing that the car of the Red Bull Racing sister team is not advancing. Along with this, at AlphaTauri, he would be at the mercy of Helmut Marko, who would surely have huge (maybe too high) expectations of Palou. A repeat of the De Vries scenario then lurks.

Palou has much more to gain from staying with Chip Ganassi and becoming a legend in IndyCar. He already has a title, which is then soon to be two, and the potential for more championships is also there. The chances of seeing him in F1 anytime soon has become very slim. While it is true that McLaren had originally intended to give Palou test kilometres for the F1 team after the IndyCar season ended (and probably one or two free practice sessions in a Grand Prix weekend), Brown is undoubtedly going to abandon that now.

Update at 13:00 BST

A spokesperson for the former management tells AP that Palou has decided to refrain from further cooperation with MEM. The company suspects that Honda (engine supplier to Ganassi Racing) would like to keep Palou on board and possibly give him a role in the F1 program once Honda has entered into a partnership with Aston Martin. That will happen from 2026 onwards.