Options and Non-Contract Contracts: Explaining Motorsport’s Silliest Silly Season

(Editor’s Note: The following is an excerpt of an article written by Kutztown University sports law professor Kerri Cebula, JD about legal Issue in motorsports. The full article appears in Sports Litigation Alert.)

In sports with a collective bargaining agreement, the rules for negotiating a player contract are clear.  There is a proscribed time for negotiations and a date when contracts can be signed.  The uniform player contract, negotiated as part of the agreement, is generally available to the public either through a Player’s Association or a leak.  When a player signs with a team, the length of the contract and the player’s salary are generally released.  This means that fans know when a player’s contract expires and when they will be a free agent, able to negotiate with another team.

It is different in motorsport.  Driver contracts in all forms of motorsport tend to be confidential affairs.  Typically, all that is publicly know is that a driver and a team have agreed to a contract and maybe the years involved.  Occasionally comments will be made by a team about an attempt to sign a driver or by a driver discussing why he chose to sign with a particular team.  Kyle Busch’s contract negotiations during the 2022 season are an example of the usual way driver contracts are publicly handled in motorsport.

But the 2022 season also gave fans a fascinating inside look at how driver contracts are actually negotiated.  First, in July, Chip Ganassi Racing (CGR) announced that it had extended 2021 IndyCar Champion Alex Palou’s contract through the 2023 season; the press release included a quote from Palou (Malsher-Lopez, 2022a).  A few hours later, Palou announced that he had not agreed to the contract extension, that he never gave the quote, and that he had signed a contract with Arrow McLaren SP (AMSP) to drive for their IndyCar team starting in 2023 (Malsher-Lopez, 2022b).  In August, Alpine’s Formula One team announced that Oscar Piastri would be their driver for 2023 (Duncan, 2022).  Again, just a couple of hours later, Piastri announced that he had not signed a contract with Alpine, but instead signed with McLaren’s Formula One team (Duncan, 2022).

While the two disputes seemed similar from the outside – a driver who was believed to be under contract for one team announcing otherwise – the two disputes had very different outcomes.  Palou will drive for CGR in 2023 while Piastri will drive for McLaren.  And that is down to the differences in the original contracts signed by the drivers.

Alex Palou’s Option

In July 2022, CGR announced that it had extended Alex Palou’s contract through the 2023 season.  Palou disagreed with that statement and announced that he had signed a contract with AMSP to drive for them in 2023.  It is believed … (The rest of the article appears in Sports Litigation Alert.)