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McLaren has won more than $12million in its claims against IndyCar champion and its ex-Formula 1 test driver Alex Palou.
The total sum represents more than half of what McLaren was trying to win in its case against Palou, who in 2023 breached a contract to join McLaren’s IndyCar team and continue as an F1 test and reserve driver.
McLaren Racing CEO Zak Brown called it an “entirely appropriate result”, while Palou described himself as "disappointed that any damages have been awarded to McLaren" and emphasised that McLaren's "F1 claims against me, which once stood at almost $15m" were "dismissed in their entirety".
McLaren sought compensation after Palou admitted breaching his contract to join its IndyCar team to the end of 2026, with an option for 2027, alongside an F1 programme, to instead stay with Chip Ganassi Racing.
Palou’s defence argued McLaren was not entitled to significant damages because he was misled over his F1 prospects with the team, and that several areas of its claims were inflated or irrelevant.
But McLaren has won almost all of what it claimed against an NTT IndyCar sponsorship deal that was set with Palou driving that car and was revised - later terminated - after he failed to join.
The judge awarded McLaren $5.38million for the 2024-2026 seasons and a further $950,000 for 2027.
The NTT base fee claim was the largest individual part of McLaren’s case but it has also succeeded in just over $2million in lost performance-based revenue, and a further - yet to be determined - amount between $2-2.5million for other sponsorship losses.
McLaren also succeeded in its claim for $1.3million for Pato O’Ward’s salary increase in the wake of Palou’s reneging, to guarantee it retained at least one top driver, and a further $500,000 for the payment McLaren would have received from General Motors for running an “A-level driver” - which its eventual Palou replacements at short notice did not satisfy.
It failed in its bid to reclaim smaller sums tied to F1 sponsorship, Palou’s testing costs, and a sign-on bonus that McLaren argued was an advance on a salary Palou forfeited by not fulfilling his contract.
In addition to the damages awarded, McLaren will seek interest and reimbursement of its legal expenses at a further hearing.
Palou had Chip Ganassi Racing’s support during legal proceedings as his team indemnified him against any potential losses.
What the parties said
“As the ruling shows, we clearly demonstrated that we fulfilled every single contractual obligation towards Alex and fully honoured what had been agreed,” Brown claimed.
“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.”
Meanwhile, Palou thanked expert witness Otmar Szafnauer - former Aston Martin and Alpine F1 team principal - and said he is "considering my options with my advisors" in the aftermath of the verdict.
"The court's decision shows the claims against me were completely overblown," Palou claimed.
"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."
It is not spelled out who exactly Palou refers to as "the driver who replaced me" - but it is presumably a reference to Nolan Siegel.
David Malukas was the de facto replacement signing McLaren made after Palou's u-turn, but was injured in the off-season and never raced for the team, released to make room for Theo Pourchaire, who then was himself sidelined for Siegel.
Siegel, 22nd in the standings last year, still drives for McLaren and is believed to bring funding to the team.
An added comment from Palou's current boss Ganassi said: "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 organization has always done best, competing at the highest level. "
