Palou Ordered to Pay $12M to McLaren in Breach of Contract Suit
DAYTONA BEACH, Fla. — Four-time IndyCar champion and 2025 Indianapolis 500 winner Alex Palou has been ordered to pay McLaren Racing more than $12 million for breach of contract in 2023.
The ruling from London’s High Court was announced on Friday. The breach of contract suit was filed by McLaren after Palou had backed out of two different deals with them and chose to remain with Chip Ganassi Racing in IndyCar.
McLaren initially sought nearly $30 million in damages, but that number fell to $20.7 million as the racing team wanted to reclaim money allegedly lost mostly to sponsorship revenue. All the damages awarded to McLaren were tied to losses to their IndyCar team, not Formula 1.
“As the ruling shows, we clearly demonstrated that we fulfilled every single contractual obligation towards Alex & fully honoured what had been agreed,” McLaren Racing CEO Zak Brown said in a statement after the ruling, which he also called “an entirely appropriate result.”
In his own statement, Palou said he’s disappointed that any damages have been awarded to McLaren because they did not suffer with the F1 driver they signed instead of him.
“The court has dismissed in their entirety McLaren’s Formula 1 claims against me which once stood at almost $15 million,” Palou said in a statement. “The court’s decision shows the claims against me were completely overblown. It’s disappointing that so much time and cost was spent fighting these claims, some of which the Court found had no value, simply because I chose not to drive for McLaren after I learned they wouldn’t be able to give me an F1 drive.
In 2022, Palou signed with McLaren to drive for its IndyCar team the following year. However, Ganassi exercised an option on Palou for the 2023 season. The matter was decided through mediation and McLaren ended up covering Palou’s legal costs.
Then, McLaren signed Oscar Piastri for its F1 team and Palou decided not to move to McLaren’s IndyCar team. He argued that his contracts with McLaren were “based on lies.”
IndyCar team owner Chip Ganassi, who is covering Palou’s costs to McLaren, said the Spaniard has their full support.
“We know the character of our driver and the strength of our team, and nothing changes that,” said Ganassi. “While we respect the legal process, our focus is exactly where it should be: on racing, on winning, and on doing what this organization has always done best, competing at the highest level.”
Palou has won four IndyCar championships in the last five seasons, including the last three.
