McLaren Awarded Multi-Million Dollar Payout in Palou Case

Formula 1, Sportrik Media - McLaren has been awarded a multi-million dollar payout by the UK High Court following a contract dispute with former driver Alex Palou, bringing a high-profile legal battle spanning Formula 1 and IndyCar to a partial conclusion.

The case stemmed from Palou’s breach of contract in 2023, when the Spanish driver withdrew from an agreement to join McLaren’s IndyCar programme alongside a planned role as a Formula 1 test and reserve driver. McLaren pursued damages close to $20 million, citing financial losses across both racing programmes.

Palou admitted to breaching the contract but argued that his decision was driven by unmet expectations. He maintained that he believed McLaren was positioning him for a Formula 1 race seat, potentially as early as 2024. When it became clear that such an opportunity would not materialise, Palou withdrew from the agreement and signed a new deal with Chip Ganassi Racing.

The trial was heard at London’s High Court in October 2025, with testimony from Palou and McLaren Racing CEO Zak Brown. Proceedings became particularly tense during Brown’s cross-examination by Palou’s counsel, Nick de Marco KC, including exchanges relating to disappearing WhatsApp messages. No evidence was found to suggest that any sensitive material had been deleted.

In his ruling, Mr Justice Picken dismissed McLaren’s claims relating to Formula 1 in their entirety. As a result, Palou is not required to pay any compensation connected to McLaren’s F1 programme, including the abandoned test and reserve driver role.

However, the court upheld McLaren’s claims linked to IndyCar. Palou and his management company, ALPA Racing, were ordered to pay $1,312,500 in driver salary, $5,382,344 covering the 2024–2026 seasons, and a further $950,000 for the 2027 season.

Additional sums were also awarded. A $500,000 bonus from General Motors to McLaren, linked to running a high-calibre driver, must be repaid, alongside a $2.05 million claim for lost revenue.

The confirmed total stands at $10,194,844, with a further sponsor-related claim valued between $2 million and $2.5 million still to be determined. If that final element is awarded in full, McLaren’s overall recovery could rise to approximately $12.6 million, or around £9.3 million, from the near-$20 million initially sought.

The judgment represents a significant legal victory for McLaren, while also setting an important precedent regarding the enforceability of cross-category driver contracts as Formula 1 and IndyCar programmes become increasingly interconnected.