The fascinating finances making it cheaper for McLaren to pay Ricciardo off

Daniel Ricciardo’s contract with McLaren reportedly includes interesting clauses which mean it was now cheaper for the team to pay him off than to keep him.
Daniel Ricciardo (AUS)
Daniel Ricciardo (AUS)

Ricciardo will leave McLaren at the end of 2022, despite being contracted until the end of 2023, and has acknowledged his disapppointment.

Only the driver has the right to end the contract early, not the team, a Speedweek report says, which is why Ricciardo is negotiated a pay-off when he was told that McLaren wanted to replace him with Oscar Piastri.

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It is cheaper for McLaren to pay Ricciardo off, and pay the salary of his replacement Piastri, than it would be to keep Ricciardo for 2023, according to French sports business website

That is reportedly because Ricciardo’s salary, on his current contract, was due to increase next season.

He penned a three-year deal with McLaren in 2020 - the agreement was for him to be paid an estimated £12.2m in each of the first two seasons. This year, that makes him the joint-fifth highest earner on the F1 grid.

That figure was due to increase for 2023, the final year on Ricciardo’s contract, before it was agreed that he would exit early.

(L to R): Lando Norris (GBR) McLaren with team mate Daniel Ricciardo (AUS) McLaren. Formula 1 World Championship, Rd 5,
(L to R): Lando Norris (GBR) McLaren with team mate Daniel Ricciardo (AUS)…

His teammate Lando Norris is already earning an estimated £20m per season, with four more years still to run on his current contract.

McLaren intend to pay Ricciardo a settlement equivalent to 50 percent of his contracted 2023 salary, report.

In total, McLaren believe that Ricciardo’s pay-off, plus Piastri’s salary for 2023, plus compensation to Alpine (who insist Piastri is already under contract with them), would total an estimated €19m (£16m) - that is still less than keeping Ricciardo as their driver for next season.

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