Palou ordered to pay $12m to McLaren in contract breach case

Alex Palou has been ordered to give McLaren over $12m in compensation following a ruling from London’s High Court over the breach of contract case.

The ruling comes after a five-week trial last year, following a lawsuit the team filed when Palou backed out of two different agreements.

McLaren was originally seeking $30m in damages as part of reclaiming money allegedly lost in sponsorship, driver salaries and performance earnings. However, the financial number was reduced to $20.7m, with Palou set to pay more than $12m in compensation.

The majority of the damages McLaren has been awarded were related to sponsorship with Palou.

Palou, a four-time IndyCar Series champion, has not been ordered to pay anything related to Formula 1 losses that were claimed by McLaren as a byproduct of him remaining with Chip Ganassi Racing instead of moving to Arrow McLaren, the IndyCar team for McLaren. All the damages awarded to McLaren were tied to losses the IndyCar team suffered by Palou's change of mind.

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

Race winner Alex Palou, Chip Ganassi Racing

Photo by: Penske Entertainment

“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.”

Meanwhile, McLaren is also seeking reimbursement of its legal expenses at a further hearing.

McLaren CEO Zak Brown said: “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.” 

Team owner Chip Ganassi expressed his thoughts on the decision impacting his driver: “Alex has our full support, now and always. We know the character of our driver and the strength of our team, and nothing changes that. While we respect the legal process, our focus is exactly where it should be: on racing, on winning, and on doing what this organisation has always done best, competing at the highest level.

"We’re locked in on chasing another IndyCar Series championship and defending our 2025 Indianapolis 500 victory. That’s where our energy is, and that’s where Alex’s focus is, on the track, doing what he does best: winning.”