Closing arguments in the dramatic, near-$20million court case between McLaren and IndyCar champion Alex Palou have brought a fascinating trial to a public end before a verdict is reached potentially as late as January 2026.
A month on from Palou’s testimony and defence making headlines when the trial began, both sides have made their final submissions to the UK commercial court in London.
McLaren is seeking damages following Palou’s admitted breach of contract when he reneged on a deal with the organisation to stay at Ganassi instead.
He had signed for McLaren’s IndyCar team on a deal running from 2024 to the end of 2026 - with an option on McLaren’s side to extend to 2027 - alongside a Formula 1 reserve driver programme which had already begun while Palou was at Chip Ganassi Racing in 2023.
He then reneged, choosing instead to remain with Ganassi for 2024. He went on to win his third and fourth IndyCar titles with the team across that year and this.
Palou has admitted to the breach and his defence has been based on disputing McLaren’s right to significant damages with a stance that, McLaren argued in closing, was commercially unrealistic and strategically obstructive.
The final claim
McLaren argues Palou caused quantifiable financial and commercial losses relating to sponsorships – especially a lucrative NTT deal – prize money, and additional salary costs.
Its updated loss figures, as of August 31 2025, amount to $19,570,578 across six key areas.
This total is reduced to $18,713,478 after interest and discounts but the actual claimed losses are, in order of highest value:
- NTT base fees, totalling $7,266,902, because its original agreement with McLaren was based on Palou joining and driving in the NTT car. McLaren argues this deal was renegotiated, and later terminated early, because of Palou’s refusal to join the team so is seeking lost profits from the reduction in base fees and losses associated with the termination.
- “Other IndyCar sponsorship” amounting to $5,839,809 based on reduced income on what could be sold on the #6 car, and inventory related to it, over a four-year period compared to “if the car was driven by the IndyCar ‘GOAT’”.
- Performance-based revenue, totalling $4,102,876, based on prize money and bonuses that McLaren expects would have been reasonably achieved with Palou in the car. It claims to have lost $247,000 for each race Palou would have won with the team and estimates at around four victories a season this amounts to almost $4million over four years.
- Driver salaries, totalling $1,312,500, McLaren says it had to pay especially to its sole “franchise driver” Pato O’Ward, once Palou didn’t join to protect itself in the driver market. O’Ward was described as becoming “indispensable” after Palou’s breach and the situation gave him significant leverage.
- Lost F1 sponsorship of $548,490 attached to what McLaren says it had to give NTT as part of the reworking of its deal post-Palou.
- A GM annual uplift of $500,000 for meeting an arbitrary “A-level driver” threshold that Palou would have satisfied but his replacement(s) did not.
There is also a claim of around $1.1million in wasted expenditure as McLaren seeks reimbursement for the F1 testing opportunities Palou was given - in anticipation of him fulfilling a long-term role as a reserve driver - and a $400,000 sign-on bonus that McLaren argues has a “total failure of basis” since he breached so early he didn’t perform IndyCar duties the payment was conditional on.
Ricciardo replacement suggestion
Among the revelations in court were minutes from a board meeting in early 2022 that show Palou was presented then as a potential F1 race driver for McLaren, not just a reserve.
This was when McLaren was starting to consider replacing Daniel Ricciardo, who had suffered a difficult first year despite winning the 2021 Italian Grand Prix - and would eventually be paid off to leave at the end of 2022.
He was eventually replaced by Oscar Piastri, who was on McLaren’s radar at the start of 2022 even though its serious interest in him only emerged that summer.
However, in March 2022, the McLaren board was given three options for a potential Ricciardo successor: Palou, Colton Herta (who had tested with McLaren) and Piastri, who was going to act as a McLaren reserve in 2022 in a shared deal with Alpine.
It was indicated that Piastri was the preference, subject to him not racing for Alpine in 2023.
But McLaren submitted that this board recommendation was evidence it clearly took Palou’s F1 role seriously and that his reserve duties were not just a token gesture to trick him into racing for the IndyCar team.
Palou's conflicting timelines
A key theme from the trial was that Palou felt his McLaren contract was based on “lies” and that he was “misled” by McLaren Racing CEO Zak Brown.
One of his arguments was that the F1 opportunity was never serious and Brown used that to trick Palou into racing for McLaren’s IndyCar team.
There appears to be a conflict in the timeline that Palou expressed, though. He said that everything changed for him when McLaren signed Piastri, and that this made it clear Palou would have limited F1 chances.
But this happened across August and September of 2022. Palou signed his revised McLaren agreement in October 2022, off the back of mediation with Ganassi (which also took Palou to court as he tried to breach his Ganassi contract in the first place trying to join McLaren for 2023).
So, McLaren argued that the timeline for when Palou claims to have realised he had no F1 chance “makes no sense” and that “it is clear from Mr Palou’s evidence that he had no intention to honour his contract with McLaren at the point that it was signed, and had entered it only with a view to exploiting the crossover F1 opportunities it presented to him, before going back to CGR”.
McLaren also stresses that Palou admitted liability without pursuing any counter-claim for deceit or misrepresentation, which it calls “unthinkable” if Palou genuinely believed he had been misled.
NTT as McLaren's strongest play?
McLaren’s largest claim against Palou, the NTT deal renegotiation, comes across strongest in its written submission.
It leant heavily on evidence from David Croxville, formerly executive vice president and chief financial officer at NTT, to argue Palou driving for McLaren had been “determinative” to NTT sponsoring the team and the car he was due to race.
Once he breached, NTT felt the original base fees no longer made sense and the agreement was renegotiated – and subsequently terminated (it ends next year instead of 2028), by use of an exit clause.
Croxville said “Alex was an essential part of our decision” and “all conversations around payment…were based on Alex Palou coming in mind”. There was also a reference to an internal email from 2022 that McLaren “intend to put Alex P in their car in 2024”.
This led to the original base-fee level being described as “out of whack” without Palou and an amendment reducing the 2024 base fee by $1.75m a year to $5m, re-specifying incentives and the term of the deal – introducing a 2026 exit clause that has subsequently been activated as a result of poor performances in the #6 car versus what was expected had Palou driven.
Palou alternatives: Ericsson, Newgarden, "Mansell"...
It was established through the court process that McLaren had made a late multi-million dollar offer to sign Indianapolis 500 winner and ex-F1 driver Marcus Ericsson when it learned Palou would breach his contract.
However, Ericsson had already verbally agreed to join Andretti, and stood by his commitment.
Palou’s defence argues that more could and should have been done by McLaren to pursue top-level alternatives that would have satisfied the likes of NTT but also General Motors in relation to their A-level driver requirement.
McLaren’s submissions reveal that the list of names suggested by Palou’s defence as options include Ericsson, Josef Newgarden, Ryan Hunter-Reay, Tony Kanaan, Felipe Drugovich and Linus Lundqvist. It was also suggested they could have kept David Malukas (who was signed as the Palou replacement in the end but never raced for the team after getting injured early in 2024 and then dropped before he could make a race start) and Alexander Rossi, who was already at McLaren.
Newgarden, as an IndyCar Champion, stands out as the most credible option on the list in terms of the calibre of driver required - but as a long-time Penske driver, how attainable he would be was not clarified by the defence.
The Hunter-Reay and Kanaan suggestions are the most surprising, given they had stopped full-time IndyCar racing by this point. It prompted Brown to joke on the stand he could have asked 1992 F1 world champion Nigel Mansell too - given Mansell, quite famously, never officially retired…
Palou’s defence also suggested that if Ericsson was considered a serious and acceptable option, McLaren should have done more to sign him sooner. McLaren's response is this is nonsense given an offer could not be made to Ericsson before knowing Palou would breach his contract and the seat would be available.
The Ganassi role
McLaren, which considers Palou a serial breacher, has inevitably raised how in the summer of 2022 Ganassi sued Palou itself “for losses that are similar in nature to those now claimed”. This related to Palou’s original attempt to join McLaren in 2022 when he was under contract with Ganassi.
Another potential Ganassi breach emerged as the team also had a period of exclusivity to negotiate beyond 2023 too – which was also broken by the McLaren agreement.
Despite this, Palou has remained with Ganassi throughout, and continued to be incredibly successful.
Palou’s revised Ganassi agreement was signed on August 1, 2023, indemnifying him for any claims by McLaren. Palou has said it came at a cost to his base salary with the team and has limited his earning potential for years to come.
After signing that agreement, Palou cancelled a meeting with Brown on the weekend of the Nashville race on August 6 and it was not until August 8 that Palou’s lawyers informed McLaren of the intent to breach.
McLaren positions Ganassi as being more than just a moral and financial supporter of Palou.
It describes the team as an “established part of the ‘old guard’” in IndyCar and that Ganassi’s “backing” has allowed Palou’s defence to make “a root and branch challenge”.
Ganassi legal representation was in attendance throughout the trial, having sent a letter to McLaren in advance of it starting, to say they were “monitoring the McLaren litigation”, would be “scrutinising all of the evidence including all of McLaren factual (and expert) witness testimony” and that Ganassi “reserves all rights in respect of any potential claim, should evidence emerge during the course of trial”.
McLaren called this a “patently inappropriate and intimidating” letter and said Ganassi’s managing director Mike Hull, who appeared as a witness in court, “had no explanation as to how that letter came to be sent”.
It fits a trend of McLaren criticising the Palou side as taking “an ever-changing position” and a “kitchen sink defence strategy”, including introducing new elements close to trial and during cross-examination that McLaren contends should have been argued sooner.
