Reigning NTT IndyCar Series champion Alex Palou has been ordered to pay McLaren $12 million in a breach of contract suit.
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This suit stems from Palou backing out of deals to drive for McLaren, a dispute that began in 2022. Palou remained with Chip Ganassi Racing and has since won three consecutive IndyCar titles and the Indianapolis 500.
McLaren has won two constructor championships in F1. The team won the 2025 season's driver championship with Lando Norris.
"This is an entirely appropriate result for McLaren Racing," McLaren Racing CEO Zak Brown said in a statement, per AP. "As the ruling shows, we clearly demonstrated that we fulfilled every single contractual obligation towards Alex and fully honored what had been agreed.
"We thank the court for recognizing the very significant commercial impact and disruption our business suffered as a result of Alex's breach of contract with the team."
The first contract issue occurred ahead of the 2023 IndyCar season when Chip Ganassi Racing exercised its option on the Spaniard to keep him in-house.
Palou contested this on social media while McLaren announced a contract with him starting in 2023. Chip Ganassi Racing responded by filing a lawsuit. The two sides reached an agreement in mediation that kept Palou at CGR and set him up to move to McLaren in 2024.
This new role would feature Palou as the reserve driver for McLaren's F1 team while competing on the IndyCar side in 2024-2026.
The second contract dispute, which led to this lawsuit and $12 million ruling, occurred in August 2023. Palou informed McLaren that he would not honor this contract. He later argued that he would never get a change in F1 and that he was too old to wait for another driver to get injured.
McLaren brought a lawsuit against Palou in UK Commercial Court, seeking at least $23 million in damages. This amount included future sponsorship for his race car, the costs of using him as a reserve driver in F1, and a $400,000 advance on his 2024 salary.
Palou only has to pay $12 million after the ruling by London's High Court. He just has to cover the losses suffered by McLaren's IndyCar team after Palou remained with Chip Ganassi Racing. The damages to the F1 team were dismissed.
"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 after the ruling. "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.
"I'm disappointed that any damages have been awarded to McLaren. They have not suffered any loss because of what they have gained from the driver who replaced me. I am considering my options with my advisors and have no further comments to make at this stage."
