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Alex Palou

Source: PHOTO: Karl Zemlin/Penske Entertainment

SURREY, England. — Alex Palou has admitted to breaching the contract that he signed to join McLaren for the upcoming racing season.

In court documents, the two-time NTT IndyCar Series Champion conceded that fact in a 20-page response to a multi-million dollar lawsuit filed against him by McLaren Racing. The lawsuit seeks to recoup time and money spent on Palou in the last year as he was supposed to be preparing for his role with McLaren.

Palou’s response was filed in the High Court of Justice Business and Property Courts of England and Wales Commercial Court.

McLaren Racing is also seeking to recoup any future revenue tied to sponsorship dollars that Palou was going to be bringing with him. This included a sponsorship deal with NTT Data.

Palou was due to join Arrow McLaren as an IndyCar driver in 2024 with the added purpose of being the team’s reserve driver for McLaren F1. Palou’s response says that he “renounced his contractual obligations” with McLaren after it became clear to him that the team didn’t fully support his ambition to eventually race in Formula One.

As a result, Palou changed his mind and chose to stay with Chip Ganassi Racing for the 2024 IndyCar season, and soon after signed a three-year contract extension with CGR Teams.

Palou said in late July, right around the time of the Gallagher Grand Prix in Indianapolis, that he would not be joining McLaren after all. That became clear after Palou chose not to join the team at the then-upcoming Formula One Miami Grand Prix as a test driver.

McLaren says they spent hundreds of thousands of dollars to put him up for the event and to have him there, money they would like to have back.

Moving forward, Palou’s camp is trying to avoid having to pay damages to McLaren. McLaren says they are owed $15 million in lost future revenue that Palou would have brought with him to the team. That’s on top of $7 million in prize money awarded to Palou by IndyCar.

It also includes driver development costs, including simulator work. In total, McLaren says Palou is on the hook for $23 million.

Palou’s lawyers contend that McLaren cannot predict the amount of revenue Palou would have brought in, especially since Palou is not their F1 driver. They also say the IndyCar losses they are suing for are moot since they are suing on the contention that Palou was under contract as an F1 driver.

The case is still being adjudicated in court.