For anyone following F1 this year, most of the season has involved speculation and rumour centred on what Max Verstappen may do next year, whether he would stay or change teams, and how that will impact the whole of the 2026 driver market.
For those perhaps not interested in F1 (rumour has it there are some): Max Verstappen is a very, very good racing driver (a four times F1 World Champion). He is currently with Oracle Red Bull Racing. Even with his talent, he was at times being let down by a somewhat fickle car. The team itself has also been going through management and organisational stormy waters. This is not the occasion to get into the details of that; suffice it to say that Max was allegedly being wooed by other teams to jump ship at the end of the 2025 season.
It's not clear if the terms of Max’s contract allow him an early exit, but even if it did, as the F1 technical rules are changing for next season and nobody seems to know quite what to expect in design and engineering development terms, Max may decide to stay where he is. But the whole issue of “what will Max do?” has rippled through the F1 paddocks as other drivers and teams jostle to settle their driver arrangements for 2026. The addition of an 11th team next year, Cadillac F1, has also opened up opportunities for experienced and rookie drivers.
All this means there is more noise than ever about driver contracts. Although details are rarely discussed openly it may be of interest to mention some of the contractual areas where negotiations with drivers are likely to focus. Of course, all the usual elements are carefully considered and negotiated – warranties, indemnities, etc etc – but this article is not about them. It is about the issues of practical interest to most drivers and teams: the termination rights of both driver and team, the scope of driver obligations (outside driving itself), prohibited activities for drivers and branding rights.
Termination rights: how F1 drivers negotiate their escape clauses
Driver contracts are usually for one or two years at a time. While there are exceptions, it is rarely in a team’s interests to bind itself to a given driver for several years. Verstappen himself is currently contracted to Red Bull until the end of the 2028 season, but only three of the 19 other F1 drivers are currently contracted to race beyond 2026.
Drivers of the quality of Senna, Schumacher, Alonso or Verstappen are unusual. From a driver’s perspective, while a guarantee of employment with a team for several years may be attractive for those lower down the rankings, it is less attractive to top drivers, who want the freedom to renegotiate terms as their market value climbs – consistent performance over time is highly valued. Although teams generally want to lock-in drivers to contracts when they know they have a star, and drivers want to lock-in a team, drivers may want escape clauses such as freedom to renegotiate contracts after a year or two for all sorts of reasons.
Drivers lower down the rankings naturally have limited negotiation leverage – only 20 drivers can be employed on racing contracts each year (rising to 22 in 2026) and, although teams also have reserve drivers and testing drivers, racing positions are rare and highly prized. But mid-position drivers have some degree of leverage because of their experience, car development feedback and so forth. So, negotiations on each party’s termination rights can be drawn out. And, as with the case of Max Verstappen, one driver’s market position can impact the leverage of others. This certainly seemed to be the case in the negotiations between Mercedes and George Russell to extend his current race contract to the 2026 season. These may have gone differently if Mercedes had managed to lure Max away from Red Bull.
Termination rights or escape clauses tend to be pursued by top-ranked drivers, rather than by teams. These drivers want to be able to walk away from an underperforming team without having to be bought out of their contract by a new suitor team. By contrast, lower and mid-ranked drivers seldom want to leave teams mid-contract.
There are exceptions: rookie Spanish driver, Alex Palou has been taken to court by Maclaren for unilaterally terminating his contract to drive for them in the 2023 Indycar season. Palou says he only signed the contract because he understood it would give him an opportunity to become one of the Maclaren F1 drivers, however this condition or escape clause was not in the written agreement. When Maclaren signed another rookie as their F1 driver, Palou believed he had been misled, and terminated the contract, resulting in a multi-million pound claim against him and the Indycar team he is now driving for.
Prohibited driver activities: why F1 teams control drivers’ off-track risks
Although racing drivers may be said to be risk-takers, as they are enormous investments for their teams their contracts usually contain a clause restricting the activities they can undertake in their own time without the team’s express consent, such as (other!) extreme sports. This area is particularly poignant in light of Michael Schumacher’s terrible skiing accident in December 2013. He was no longer a race driver by then, but his accident exemplifies why teams want to have some reasonable degree of control over their drivers’ extra-racing activities.
The exact wording of such prohibitions can involve detailed negotiation, depending on the extent of a driver’s inclination to pursue dangerous activities. Teams need to consider the scope of any prohibition carefully: should a team prohibit specific sports only such as paragliding or free climbing, or could they get away with a clause prohibiting any activity which a reasonable person would regard as dangerous? While the latter clause is unlikely to find favour with drivers or their lawyers, it is important to a team to control a driver who is valuable precisely because they enjoy risky activities. The potential for this area to extend contract negotiations is clear.
Driver obligations beyond the track: fitness, media and sponsorship duties
This is an area in driver contracts where a team would be well advised to consider its options carefully. For example, drivers may be contractually required to stay in physical condition appropriate for race demands or have other obligations that protect a team’s wider interests. As the F1 business has grown exponentially in recent years – perhaps particularly since 2019 or so and in the light of the Netflix documentary show “Drive To Survive” – corporate sponsorship is of course ever more important, and drivers are expected to play their part in keeping sponsors happy. In case a driver is reluctant to recognise this, including this as a contractual obligation is important for teams. Some time ago one F1 driver was notorious for being unreliable when it came to ‘meet ‘n greets’ with corporate sponsors, much to the chagrin of the team. The issue was sorted out extra-contractually, but it would have been easier for the team if the contract included a clause enabling it to sanction a driver who failed to abide by corporate PR expectations.
Branding and sponsorship rights
Amongst the plethora of sponsor logos and other branding adorning F1 cars and drivers’ helmet and race overalls, most relate to team sponsors and others are specific to the driver. The areas on a driver’s helmet, race overalls and the race car itself on which the driver’s own sponsors may be displayed should be set out in the driver’s contract. This often done in a schedule that includes schematic images of helmet, overalls and car and the precise location and size of sponsor branding permitted to a driver.
The sponsorship rights agreed between a team and driver are very important to both parties. The sums involved can be very large indeed, and not only for top drivers. All race drivers in F1 have their own sponsors, some of whom have a long relationship with the driver having supported them through the lower divisions.
Sponsorship in F1 is of course a huge enterprise, and a subject ranging far beyond the scope of this article. It suffices to say that it will be a significant area for both parties during a race driver contract negotiation.
Conclusion: the high-speed world of F1 contract negotiations
This article has just been a glimpse into some of the fascinating and actively negotiated areas in the complex world of racing driver contract negotiations. The short-term nature of most driver contracts may be thought to be of benefit primarily to F1 teams, and in many cases this is probably true, but it is not always so. For all drivers, not only the top-ranked, and for all teams, there are plenty of leverage points worth considering. How these play out in reality is, and will continue to be, a source of endless fascination for those of us who love the sport and for fans of contract negotiation generally.
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