Palou ordered to pay $12m as McLaren wins contract battle

Alex Palou’s long-running legal standoff with McLaren has reached a dramatic – and costly – conclusion for the Spaniard.

A London court has ruled in favour of McLaren, ordering the four-time IndyCar champion to pay more than $12 million in damages after finding he breached a signed contract to drive for the team.

The judgment brings to an end a bitter dispute that has simmered for over two years following Palou’s decision to back out of a deal to race for Arrow McLaren in the 2024 IndyCar season. While Palou ultimately stayed put at Chip Ganassi Racing, the court concluded that his withdrawal caused tangible commercial harm to the Woking-based outfit’s IndyCar operation.

The damages figure once loomed far higher – at times exceeding $30 million – but the court pared back McLaren’s claims, accepting only losses directly linked to its IndyCar programme.

All claims connected to McLaren’s Formula 1 business were dismissed entirely, giving Palou a partial legal victory even as the financial sting remains severe.

McLaren Claims Vindication

For McLaren, the ruling represents validation after a bruising legal battle. The team argued that Palou’s decision forced it to rework sponsorship arrangements and undermined commercial commitments already in place.

“This is an entirely appropriate result for McLaren Racing,” said McLaren CEO Zak Brown.

“As the ruling shows, we clearly demonstrated that we fulfilled every single contractual obligation towards Alex and fully honoured what had been agreed.

“We thank the court for recognising the very significant commercial impact and disruption our business suffered as a result of Alex’s breach of contract with the team.”

Palou Pushes Back

Palou, who retained the full backing of Chip Ganassi Racing throughout the legal proceedings, responded by stressing what he views as the court’s rejection of McLaren’s most aggressive claims.

He also made clear the fight may not be over.

“The court has dismissed in their entirety McLaren’s Formula One claims against me which once stood at almost $15m,” said Palou. “I’d like to thank Otmar Szafnauer for his expert assistance.

“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.

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“I am considering my options with my advisors and have no further comments to make at this stage.

“I look forward to the upcoming season with Chip Ganassi Racing.”

Whether Palou ultimately appeals remains to be seen, but the ruling sends a stark message across the paddock: even star power offers no shelter when contracts are broken.

For now, McLaren has its legal win – and Palou, one of IndyCar’s brightest talents, is left counting the cost.

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