McLaren has been awarded more than $12million in its legal case against four-time IndyCar Series champion Alex Palou.
As previously reported by The Athletic, the dispute dates back to October 2022, when Palou agreed to sign for McLaren’s IndyCar team, Arrow McLaren.
Under that deal, it was agreed Palou would take up a position as McLaren’s reserve Formula 1 driver in 2023, with the possibility of promotion, before racing for their IndyCar team across the 2024, 2025 and 2026 seasons. He would also continue to drive for his existing Chip Ganassi Racing (CGR) team in the 2023 season.
However, in August 2023, Palou opted against making the move, instead choosing to stay with CGR.
Palou, who won the IndyCar championship in 2021 with CGR, followed that up with further titles in 2023, 2024 and 2025. As Justice Simon Picken said in his judgement on Friday: “He is considered to be a generational talent — possibly even what is known as the ‘G.O.A.T’ or ‘greatest of all time’.”
Palou (right) with Chip Ginassi (left) after winning the IndyCar Series in May 2025 (James Gilbert/Getty Images)
McLaren later sued Palou, claiming in excess of $20m in losses, according to Friday’s judgement.
In total, McLaren was awarded $10.2m, with a further amount of between $2m and $2.5m dependent on the outcome of expert evidence.
Earlier in the trial at London’s High Court, Paul Goulding KC, representing McLaren, said the losses stemmed from having to renegotiate sponsorship deals, lost performance-related revenue and extra money spent on existing McLaren driver salaries following Palou’s breach.
Palou did not dispute breaching his contract. However, his legal team argued the amount claimed was “vastly overinflated.” They argued that no damages were payable.
In his 124-page judgement, Justice Picken today ruled in McLaren’s favour on a number of its claims.
He awarded it $1.3m in relation to its claim for additional sums it had to pay to other drivers following Palou’s breach.
McLaren also partially succeeded in some of its claims for earnings tied to sponsorship deals — for example, with NTT and GM — and driver performance it would have received if Palou had raced for the team.
However, McLaren’s claims for the F1 loss, wasted expenditure, and Palou’s $400,000 signing-on bonus were unsuccessful.
How the parties have responded
Responding to Friday’s judgement, McLaren CEO Zak Brown said in a statement, shared with The Athletic: “This is an entirely appropriate result for McLaren Racing. 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.”
In addition to the damages award, McLaren Racing told The Athletic it will also be seeking interest and reimbursement of its legal expenses at a further hearing.
Brown called the judgement “entirely appropriate” (Hector Vivas/Getty Images)
Meanwhile, Palou said in a statement, shared with The Athletic: “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. I look forward to the upcoming season with Chip Ganassi Racing.”
How we got here
During the trial, Palou alleged that Brown had duped him into signing with the IndyCar team by suggesting there was a genuine pathway to a Formula 1 driving seat.
The Spaniard said that, when he realised he had been sold a dream “based on lies and false impressions”, he decided to back out of the deal.
Brown and McLaren rejected the allegation, insisting their intention to support his Formula 1 ambitions was genuine. They also suggested that it was, in fact, Palou who had led them on.
“He entered (into the contract) only with a view to exploiting the cross-over F1 opportunities it presented to him, before going back to CGR,” Mr Goulding KC told the earlier hearing.
Palou driving a McLaren F1 car during a practice session ahead of the 2022 USA Grand Prix (Chris Graythen/Getty Images)
Nick De Marco KC, representing Palou, had claimed there had been a “pervasive culture of cover-up” at McLaren.
Regarding the use of the disappearing WhatsApp message feature, De Marco told the court: “It is breathtaking that an organisation like McLaren can have this policy and issue it to its employees, which is effectively a rogue’s charter of how to avoid disclosure in legal proceedings.”
In response, McLaren’s legal team acknowledged that disappearing WhatsApp messages had been used but said this was in line with company policy.
Goulding insisted there had been “no attempt to deliberately destroy evidence.”
Under Brown, McLaren has established itself as a powerhouse in Formula 1, winning last year’s constructors’ and drivers’ Championships.
In his judgement Friday, Picken said: “Mr De Marco described Mr Brown as a combative witness, who was willing to give evidence which was untrue or inconsistent in order to answer the point being put to him. That Mr Brown was keen, and able, to stand his ground was clear. He is, after all, a competitor. However, in my view, Mr Brown was straightforward enough.”
