Alex Palou ordered to pay McLaren Racing $12M in breach of contract suit

DAYTONA BEACH, Fla. — Four-time IndyCar champion Alex Palou on Friday was ordered to pay McLaren Racing more than $12 million in the breach of contract suit the team filed when the Spaniard backed out of two different deals with the racing team.

The Friday ruling from London's High Court came after a five-week trial last year. McLaren initially sought almost $30 million in damages, but that number was reduced to $20.7 million as the racing juggernaut sought to reclaim money allegedly lost in sponsorship, driver salaries and performance earnings.

''I never wanted to end up in court. It's not really how we do things at McLaren Racing and we tried hard to find a solution at the time,'' McLaren Racing boss Zak Brown told The Associated Press at Daytona International Speedway.

"In the end Alex — supported by a large legal team — sadly left us no option, and they now have a very significant legal bill to show for it. I happen to believe that treating others with respect and staying true to your word matters a great deal both in life and in our sport, but as we have seen as this case evolved, that view wasn't shared by all involved.''

McLaren added it is still seeking interest and reimbursement of its legal expenses — a judgement in favor of the team could push Palou's total owed to more than $20 million. It is not clear if Chip Ganassi, the team owner Palou drives for in IndyCar, is covering any of the losses.

Palou was not ordered to pay anything related to Formula 1 losses McLaren said it suffered when Palou decided to remain with Chip Ganassi Racing rather than move to McLaren's IndyCar team in 2024. 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 1 claims against me which once stood at almost $15 million," Palou said in a statement. "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.

Palou has won three consecutive IndyCar titles and the Indianapolis 500 since this saga began midway through the 2022 season. He has four IndyCar titles in the last five seasons. Palou and Brown are both at Daytona International Speedway for this weekend's Rolex 24 sports car endurance race: the Meyer Shank Racing team Palou is driving for will start from the pole Saturday, while Brown is competing in a support race earlier in the day.

The bulk of the damages awarded to McLaren were tied to loss of sponsorship. Palou was ordered to pay $5.3 million to cover the losses in the team's agreement with NTT Data, $2.5 million in ''other IndyCar sponsorship revenue'' and $2 million in performance-based revenue.

IndyCar team owner Ganassi said Palou has his backing.

''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," Ganassi said. "While we respect the legal process, our focus is exactly where it should be: on racing, on winning, and on doing what this organization has always done best, competing at the highest level.

"We're locked in on chasing another 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.''

Palou first signed with McLaren in 2022 to drive for its IndyCar team in 2023, but Ganassi pushed back and exercised an option on Palou for the 2023 season. The matter was decided through mediation, with McLaren covering Palou's legal costs. Palou could not join McLaren until 2024 but was permitted to be the reserve and test driver for the F1 team in 2023.

When McLaren signed Oscar Piastri for its F1 team, and Palou's performance with Ganassi in IndyCar was so dominant, the driver decided he did not want to move to McLaren's IndyCar team and reneged on his contract.

Palou argued his contracts with McLaren were ''based on lies,'' and he'd never have a chance to race in F1. His counsel also accused Brown of destroying evidence by deleting WhatsApp messages related to the case.

McLaren contended it lost revenue when Palou backed out ahead of the 2024 season and the team had to scramble to find another driver. McLaren wanted Indianapolis 500 winner Marcus Ericsson, who had already committed to Andretti Global, so it instead used four different drivers that season.

Because none were as accomplished as Palou, McLaren argued both NTT Data and General Motors reduced their payouts to the team because McLaren did not field a driver of the caliber it had promised.