Let this be a lesson to all the young race car drivers out there; if you make a deal and sign a contract, you had better honour it. Or be prepared to pay the price. Alex Palou, the reigning IndyCar champion, has been ordered to pay $12 million in damages to rival team McLaren for breach of contract.
Back in 2022, Chip Ganassi Racing’s star driver Alex Palou signed a contract to race for the rival McLaren IndyCar team in 2023, while also being named the McLaren Formula 1 team’s reserve driver. It was seen as a pathway to F1 for the talented Spaniard. Chip Ganassi Racing pushed back, and exercised a contract option to retain Palou for the 2023 season. The messy contract dispute became public as each team claimed to have Palou on their roster for 2023, and the matter went to contract mediation.
The resulting decision was that Palou would race for Chip Ganassi Racing in 2023, but could sign for McLaren in 2024. The agreement did not prevent Palou from fulfilling his duties as McLaren F1 reserve driver for 2023 though.
Having missed the chance to sign the former IndyCar champ to their scheme, McLaren switched their focus to rookie racer Oscar Piastri, stealing him away from the Alpine Formula 1 team. Once Piastri was signed to a multi-year deal, Palou could see the writing on the wall. McLaren now had two top-tier drivers on their Formula 1 team with Oscar Piastri and Lando Norris. The chance to race for McLaren has slipped away, and Alex Palou’s dream of racing in Formula 1 was over.
Alex Palou has done okay for himself since the ugly contract dispute in late 2022. He won the IndyCar Drivers Championships in 2023, 2024 and 2025, plus the Indianapolis 500 last year. The part that still stings Palou is hat McLaren have also gone on to do great things, including back-to-back Formula 1 Constructor’s Championships in 2024 and 2025, and the Formula 1 World Drivers Title for Lando Norris in 2025.
Alex Palou is clearly a skilled driver, and paired with a top Formula 1 team like McLaren, he too could have achieved greatness on the other side of the Atlantic. However, that failed attempt to sign a contract with McLaren has backfired. The judge presiding over a lawsuit filed by McLaren has ruled that Alex Palou must pay $12 million in damages for breach of contract. Palou can appeal the verdict, but McLaren says it will seek reimbursement for legal expenses from the Spaniard if he appeals. Apparently the legal costs for both sides exceeded the amount of damages Palou has already been ordered to pay.