Álex Palou required to compensate McLaren $12 million in contract violation dispute
On Friday, four-time IndyCar champion Álex Palou was ordered by London’s High Court to pay McLaren Racing over $12 million in a breach of contract lawsuit that arose when the Spaniard withdrew from two separate agreements with the team.
This ruling followed a five-week trial that took place last year. Initially, McLaren sought nearly $30 million in damages, but this figure was later reduced to $20.7 million as the team aimed to recover funds reportedly lost in sponsorship, driver salaries, and performance earnings.
Palou was not held responsible for any losses related to Formula 1 that McLaren claimed to have incurred when he opted to stay with Chip Ganassi Racing instead of joining McLaren’s IndyCar team in 2024. All damages awarded to McLaren were associated with the losses the IndyCar team faced due to Palou’s change of decision.
“The court has entirely dismissed McLaren’s Formula 1 claims against me, which once amounted to nearly $15 million,” Palou stated. “The court’s ruling indicates that the claims against me were significantly exaggerated. It is unfortunate that so much time and resources were expended contesting these claims, some of which the Court determined had no merit, simply because I chose not to drive for McLaren after learning they could not provide me with an F1 opportunity.”
“I am disappointed that any damages have been awarded to McLaren. They have not incurred any loss due to what they have gained from the driver who took my place. I am evaluating my options with my advisors and have no further comments to provide at this time.”
Since this situation began in the middle of the 2022 season, Palou has secured three consecutive IndyCar championships and the Indianapolis 500. He has achieved four IndyCar titles in the past five seasons.
The majority of the damages awarded to McLaren were linked to sponsorship losses. Palou was instructed to pay $5.3 million to compensate for the losses in the team’s agreement with NTT Data, $2.5 million in “other IndyCar sponsorship revenue,” and $2 million in performance-related earnings.
Chip Ganassi, owner of the IndyCar team, expressed his support for Palou.
“Alex has our complete backing, now and always. We recognize the character of our driver and the strength of our team, and nothing alters that,” Ganassi remarked. “While we respect the legal proceedings, our focus remains precisely where it should be: on racing, on winning, and on executing what this organization has always excelled at, competing at the highest level.”
“We are focused on pursuing another championship and defending our 2025 Indianapolis 500 victory. That is where our energy lies, and that is where Alex’s concentration is, on the track, doing what he does best: winning.”
McLaren has claimed the last two constructor championships in F1, and Lando Norris won the driver championship last season.
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Palou initially signed with McLaren in 2022 to compete for its IndyCar team in 2023, but Ganassi intervened and exercised an option on Palou for the 2023 season. The issue was resolved through mediation, with McLaren covering Palou’s legal expenses. Palou was unable to join McLaren until 2024 but was allowed to serve as the reserve and test driver for the F1 team in 2023.
When McLaren signed Oscar Piastri for its F1 team, and given Palou’s dominant performance with Ganassi in IndyCar, he decided against moving to McLaren’s IndyCar team and withdrew from his contract.
Palou contended that his contracts with McLaren were “based on falsehoods,” and he believed he would never have the opportunity to race in F1. His legal team also accused McLaren Racing CEO Zak Brown of destroying evidence by deleting WhatsApp messages pertinent to the case.
McLaren argued that it experienced revenue loss when Palou retracted his commitment ahead of the 2024 season, forcing the team to hastily find a replacement driver. McLaren sought Indianapolis 500 winner Marcus Ericsson, who had already committed to Andretti Global, leading them to utilize four different drivers that season.
Since none of these drivers matched Palou’s level of achievement, McLaren asserted that both NTT Data and General Motors reduced their financial contributions to the team because McLaren did not field a driver of the promised caliber.
Source: espn.com
