Palou–McLaren Contract Fight Goes to Trial Amid Racing Success

Alex Palou is one of the most successful drivers in IndyCar history. The Spaniard’s accomplishments include championship titles in 2021, 2023, 2024, and 2025, as well as a highly coveted Indy 500 win in 2025.¹ When talent like Palou’s is available, teams in both IndyCar and its rival series fight tooth and nail. Since 2021, Chip Ganassi Racing (CGR) has held the honor of having the four-time champion in their car, but that honor did not come without hardship.²

In 2022, Palou agreed to join McLaren’s IndyCar team for the 2023 season.³ The signing put Palou in breach with CGR, as they held an option to re-sign him for the 2023 season.⁴ This breach resulted in CGR suing Palou.⁵ The matter was resolved via mediation, and Palou was to remain with the team until the end of the 2023 season.⁶ Palou’s contract with McLaren was amended to run from 2024 to 2026.⁷ While Palou was contractually required to leave CGR for McLaren at the end of the 2023 season, he never did so.⁸ In August of 2023, Palou’s lawyer informed McLaren that he had re-signed with CGR from 2024 to 2026. A few short days later, McLaren sued Palou for breach of contract.⁹

For many drivers, Formula 1 is the ultimate goal. Drivers will race in junior or competitor series with the hope of eventually making the jump to what is seen as the pinnacle of international motorsport. Palou appears to have been hoping to make that very jump, but felt McLaren had used his dream to deceive him into joining what Palou’s attorney claims is a “second-class IndyCar team.”¹⁰

In 2022, the McLaren Formula 1 team was coming off another mediocre year, by their standards, and looking for opportunities for improvement. Lando Norris was entering his third year in the sport and showing more promise with each race.¹¹ Shortly after signing Palou, the team signed 2021 F2 champion Oscar Piastri to pair with Norris.¹² This decision made Palou feel that his road to Formula 1 was not as guaranteed as McLaren alleged.¹³

McLaren claims that Palou’s assumption was “baseless.”¹⁴ They have good reason to say so, as although Piastri’s rookie deal was multi-year, teams often drop drivers after a single season, or even only a few races for the truly unlucky.¹⁵ Piastri was quickly successful, so successful that McLaren signed him to a multi-year extension just fifteen races into his rookie season.¹⁶ This extension essentially plummeted Palou’s odds of making the jump from IndyCar to Formula 1.¹⁷

Palou has admitted to breaching his McLaren contract, and therefore the London judge will only hear Palou’s and McLaren’s arguments regarding damages.¹⁸ McLaren paid Palou $400,000 when he signed with the team, which he has since repaid.¹⁹ Palou’s salary was $9,000,000 over three years, but the team is claiming extreme financial losses totaling more than $30,000,000.²⁰ Their number comes from claims of reduced sponsorship revenue and the need to pay other drivers to fill Palou’s role.²¹ Palou’s team argues that the numbers are incorrect and vastly inflated.²²

Palou has said that the pending suit has weighed on him and affected his on-track performance, so he is ready to put his self-attested “bad decisions” behind him.²³ While the battle endures off-track, both Palou and McLaren are dominant on-track. Palou is enjoying the IndyCar offseason after winning his fourth title, while McLaren IndyCar’s Pato O’Ward finished runner-up.²⁴ As for the McLaren Formula 1 team, they are currently the Constructors’ Championship leaders, maintaining an almost 350-point lead.²⁵ Norris and Piastri, are first and second in the Drivers’ Championship with only 25 points separating the two.²⁶ Both Palou and McLaren have seen unparalleled success and ironically, the contract fiasco may have been a blessing in disguise for all parties involved.

1. https://www.indycar.com/Drivers/Alex-Palou ↩︎
2. https://www.nbcnews.com/sports/auto-racing/alex-palous-indycar-championship-marks-chip-ganassi-racings-17th-title-rcna229200 ↩︎
3. https://racer.com/2025/09/29/the-palou-mclaren-lawsuit-is-heading-towards-resolution-here-s-what-to-know ↩︎
4. https://www.espn.com/racing/indycar/story/_/id/46420594/alex-palou-mclaren-contract-dispute-court-case-begins ↩︎
5. https://www.foxsports.com/stories/motor/alex-palou-mclaren-trial-could-end-4-year-saga-indycar-champ ↩︎
6. Supra, note 4. ↩︎
7. Supra, note 3. ↩︎
8. Id. ↩︎
9. Id. ↩︎
10. https://www.motorsportmagazine.com/articles/us-scene/indycar/mclaren-boss-deceived-alex-palou-about-f1-seat-court-hears-in-20m-case/ ↩︎
11. https://www.sportskeeda.com/f1/lando-norris-2021-f1-season-review ↩︎
12. Supra, note 10. ↩︎
13. Supra, note 5. ↩︎
14. Id. ↩︎
15. https://www.formula1.com/en/latest/article/alpine-chief-briatore-opens-up-on-decision-to-drop-doohan-for-colapinto-as.4WLvYQcJFVQwbVvSE5FeGL ↩︎
16. https://www.foxsports.com/articles/f1/mclaren-gives-f1-rookie-oscar-piastri-multiyear-contract-extension ↩︎
17. Supra, note 10. ↩︎
18. Supra, note 5. ↩︎
19. Id. ↩︎
20. Id. ↩︎
21. Id. ↩︎
22. Id. ↩︎
23. Id. ↩︎
24. https://www.espn.com/racing/standings/_/series/irl ↩︎
25. https://www.formula1.com/en/results/2025/team ↩︎
26. https://www.formula1.com/en/results/2025/drivers ↩︎