McLaren Racing and Arrow McLaren were awarded more than $12 million in damages in the UK Commercial Court case against star IndyCar driver Alex Palou for breach of contract Friday by Justice Picken, handing out the first substantive ruling in a case that began nearly two-and-a-half years ago.
Picken came to that number via awarding the teams $1,312,500 in driver salary, $6,332,344 in losses related to the teams’ deal with NTT, losses from Arrow McLaren’s deal with GM of $500,000, other sponsorship losses of at least $2 million and the loss of performance-based revenue of $2,050,000.
The case stems from Palou’s decision not to honor a contract he signed with the McLaren racing teams in October 2022 after his first IndyCar title in 2021. Palou, now a four-time IndyCar champion, attempted to join McLaren and Arrow McLaren for the 2022 season but his original team, Chip Ganassi Racing, held to a team option — it was a fight that led to a federal court case that was settled through mediation.
Palou then signed a multi-year deal with McLaren set to start in 2024. But in August of 2023, having gone on a summer tear that included four wins over a five-race stretch, Palou opted to remain with CGR — a decision he has long claimed stemmed from an apparent inability to see a ride with McLaren’s F1 team materializing. McLaren has long disputed that such an opportunity was promised and that it could be seen as a valid reason for Palou to break his contract.
McLaren once sought damages of more than $30 million — a number that ahead of trial was whittled down to around $20 million — with the largest amount tied to a renegotiated sponsorship deal with NTT Data, a longtime sponsor of CGR that jumped to Arrow McLaren for the start of 2023 on the belief that the company that had been featured on Palou’s championship-winning entry in 2021 would reunite with him. McLaren and Arrow McLaren then moved to renegotiate that deal with significantly better terms for the sponsor in hopes to maintain the relationship — but the company told McLaren and Arrow McLaren it would leave following the end of the 2026 season.
In a statement provided to IndyStar, McLaren Racing says it will pursue interest on those funds as well as reimbursement of its legal expenses. Palou has long been understood to have backing from CGR in this lawsuit.
“This is an entirely appropriate result for McLaren Racing,” McLaren Racing CEO Zak Brown said in a statement following the ruling. “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.”
Despite the $12 million in damages levied against him, Palou noted the fact the court did not honor McLaren’s Formula 1-related claims, which once stood around $15 million, showing, he believed, that those costs and losses to have been “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 said in a statement. “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.”
Chip Ganassi added: “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. We’re locked in on chasing another NTT 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.”
This article originally appeared on Indianapolis Star: McLaren awarded $12 million in lawsuit against IndyCar champ Alex Palou
Reporting by Nathan Brown, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
