Why Daniel Ricciardo’s $21m Contract Buyout is a Bargain for McLaren

Daniel Ricciardo

A few weeks ago, I was watching a video on Instagram of a guy who took his McLaren through a drive-thru car wash and was filming water leaking into his car. While it was entertaining, it was also kind of shocking considering the base price for the 540C is $184,900. Perhaps, this video was a metaphor for what was to come with Daniel Ricciardo and the McLaren team.

As most people know by now, Ricciardo is signed to McLaren through the end of the 2023 season. But with McLaren announcing that Formula 2 star, Oscar Piastri will join the team in 2023, Ricciardo is now seeking $21 million contract buyout. This isn’t the first time McLaren has been involved in a major contract buyout, though. In 2002, former team principal Ron Dennis poached Kimi Räikkönen from Sauber for $14 million. According to the Ice Man’s autobiography, Sauber was also compensated with a wind tunnel and trucks.

Considering how much more Formula One and McLaren are worth from 2002 to 2022 means that McLaren’s getting a bargain with Ricciardo’s $21 million buyout ask. I’m sure anyone who dabbles into the economics of Formula One is perplexed by this, too. Several analysts think that in the event that Ricciardo signs with another team, the buyout will be less, but I haven’t seen anything concrete that specifies why Ricciardo is asking for $21 million or what (if anything) teams are asking for in terms of compensation.

What is clear is that McLaren might be on the hook for Alpine’s legal costs and compensation for losing their reserve driver. Piastri won the F2 championship last season, so Alpine knows how valuable he is. What’s more, team principle Otmar Szafnauer has already told Reuters that “Going to the high court is over 90 percent certain that’s what we’ll do.” For those outside England and Wales, the High Court of Justice is essentially the Supreme Court for civil law.

Back in the spring, Alpine ran tests with Piastri in Austin, Texas at the Circuit of the America’s track in anticipation that he’d be moving into the second seat in 2023. That alone means that whoever Alpine signs in the event it loses the battle over Piastri has to be a veteran driver. This could mean the two teams come to an agreement that sends Daniel Ricciardo to Alpine. But that’s the best case scenario and it probably won’t be as seamless as that.

McLaren knows Ricciardo has the leverage. They can’t drop him so it’s going to take a contract buyout from another team, or he’ll have to exercise the exit clause in his contract. Meaning, take the cash from McLaren and exit peacefully. However, “peaceful” is subjective and Piastri could also sit the 2023 season out, which could complicate things further.

McLaren have continued to use Daniel Ricciardo’s likeness and image as a marketing tool–and rightfully so, as he’s still under contract. However, in these recent social media posts, the comments sections haven’t been that of praise or excitement for McLaren, but condemnation and the defense of Ricciardo. “Didn’t you guys fire him?” Asked one fan. “Kind of shady to use him for social media ‘likes.'” Another said, “Can y’all stop posting stuff with him?! We know it’s just for promo and it’s disrespectful with how you’re treating him.”

While the papaya faithful will certainly support their team regardless of who’s in the driver lineup, Daniel Ricciardo is one of the most popular drivers in the paddock; he’s charming, charismatic, and has a personality that bursts with humor and excitement. So with that said, Ricciardo fans are incredibly loyal to him, and from a branding perspective, this might cost McLaren big–at least in the short term. Thankfully for McLaren, fans know the “musical chairs” nature of the grid minimizes mourning.

Planet F1 writer, Thomas Maher said it best. “With the two teams fighting over who gets Piastri, a dispute which is likely heading down the route of civil courts, Ricciardo has become a piece of unwanted furniture which McLaren now need to pay an exorbitant amount for removal fees.”

Piastri is a talented driver so clearly McLaren thinks it’s worth the cost of going scorched earth with Ricciardo and treating him like unwanted furniture, even though the irony is that his 2021 Monza win is the only recent win on the McLaren trophy cabinet. This is a huge gamble on the part of McLaren because not only do they look like the villains here, you have to imagine that the whole ordeal is making Lando Norris uncomfortable, too. While McLaren is competing for fourth in the Constructors’ Championship, Norris is McLaren’s No.1 driver right now, but whether his performance has met expectations or not is up for debate.

I always felt like Ricciardo gambled by moving to Renault from Red Bull. Being No. 2 to Max Verstappen wasn’t going to be an easy job, so teams knew that if the contract was right, he’d make the move. At $49 million for two years, the contract with Renault was right, even though–from a competitiveness standpoint–it was more of a lateral move. You can understand why Ricciardo chose Renault, though. They offered him a contract he couldn’t turn down, and at the time, Renault looked promising. Unfortunately for Renault, COVID changed that upward trajectory. When Ricciardo signed with McLaren in 2021, however, he said “I can say today I want to be done by 35, but if I’m winning at 35 and if I’ve still got a change to win, it would be hard not to keep going.”

With Sebastian Vettel retiring and Fernando Alonso leaving Alpine to take Seb’s seat at Aston Martin in 2023, Ricciardo has a good shot at that Alpine seat alongside Esteban Ocon. Of course, this is all contingent on whether McLaren is successful in its acquisition of Piastri. Many suggested that AlphaTauri driver Pierre Gasly could make the move to Alpine. To clarify some confusion, Gasly is signed to an extension at AlphaTauri through 2023, and according to Red Bull advisor Helmut Marko, “there is no exit clause for Gasly.” Considering the grid is sorted elsewhere, Daniel Ricciardo going back to Alpine (formerly Renault) seems like the logical decision. He still has gas in the tank and is an incredibly valuable driver from a marketing perspective.

On the other hand, Ricciardo turned 33 on July 1, and just a few weeks later, McLaren announced it was signing Piastri. Ricciardo was supposed to be with McLaren until he was 34, so it makes you wonder if Ricciardo is at least considering his retirement now, especially with that quote fresh on people’s minds.

What ever the future holds for Daniel Ricciardo is up to the powers that be, and whether his performance and value translates into a new contract elsewhere is something we’ll probably know more about after the summer break. What we do know, is that with a $50 million net worth and Ricciardo scheduled to earn $15 million this season, it’s clear that he’s earned his popularity, respect, and legacy in the sport.

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