Alex Palou Loses BIG in Court Case with McLaren Racing

Alex Palou faced a multi-million dollar lawsuit with McLaren Indy LLC for breach of contract, stemming from the contract extension that he signed in 2023 with his current team, Chip Ganassi Racing.

Palou's remaining with CGR was allegedly in breach of a 2022 contract that Palou signed with McLaren, which had him set to drive for the team in 2024. In response, McLaren filed suit in the United Kingdom for approximately $25 million.

Now, in late January 2026, the British court has sided with McLaren and awarded $12 million to the team from Palou, about half of what they claimed to be owed.

The outcome of an explosive trial

In a slightly awkward turn of events for the timing of this news, both Alex Palou and Zak Brown, CEO of McLaren Racing, are on the same track this weekend. Palou will compete in the Rolex 24 Hours of Daytona race, preceded by Zak Brown's quiet entry into IMSA's HSR Classic.

Zak Brown Historic Car IMSA Entry - 1990 Jaguar XJR-10 | Via HSR IMSA Media

Team boss of Palou's current IndyCar outfit, Chip Ganassi, is also on track this weekend in a support role. Although the case's outcome is sure to be a disappointment for Palou, there were still many pieces of the case 'thrown out' in which he will not have to pay the full $25 million amount.

Some details of the damages Palou will have to pay have been released, most notably the NTT deal with McLaren's IndyCar Outfit. This deal was predicated on Palou driving one of their cars. It was later revised and eventually the sponsorship was terminated.

Here are the amounts that we know thus far:

McLaren was awarded $5.38 million for the 2024-2026 IndyCar seasons
McLaren was awarded a $950,000 for 2027
$2 million in performance-based revenue
$2-2.5 million for further sponsorship losses
$1.3 million for Pato O'Ward's Salary on the premise of a 'top driver' promised to sponsors
$500,000 in additional losses from General Motors for not running an 'A-level' driver in Palou's stead

There are further amounts yet to be determined for payment by the Spanish Driver. Palou, of course, has reacted in disbelief to the verdict, claiming again that they shouldn't have even gotten to this point in the first place.

NTT IndyCar Series driver Alex Palou is introduced during the Music City Grand Prix at the Nashville Superspeedway in Lebanon, Tenn., Sunday, Aug. 31, 2025. | Andrew Nelles / The Tennessean / USA TODAY NETWORK via Imagn Images

"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."
Alex Palou via The Race

Even with this disappointing news, Palou seems to be in good spirits this weekend at the Rolex 24 Hours of Daytona. He and his team will start on pole when the green flag drops Saturday Afternoon.

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