Alex Palou, McLaren Trial Concludes, Both Sides Await Judge’s Ruling

The Alex Palou, McLaren trial has concluded in London, as both sides await the judicial ruling that may not come until early 2026.

McLaren is seeking financial remedy of $20.5 million, stating Palou breached a contract he agreed to in 2022 when he told the team one year later that he would not be honoring that arrangement. Palou contended that pursuant to the contract negotiations, McLaren had no intention of taking him to Formula 1, once the team signed Oscar Piastri. Palou’s legal team implied the attempt at competing in Formula 1 was a key negotiation tactic before Palou signed with McLaren.

Palou is a four-time NTT IndyCar Series Champion at Chip Ganassi Racing including the past two seasons. He also won the 109^th Indianapolis 500 on May 25.

Zak Brown is McLaren Racing’s CEO, including the Formula 1 and NTT IndyCar Series Arrow McLaren team.

After sifting through court documents from UK Commercial Court in London, here are some of the findings from the month-long trial.

Below are some of those findings that were used by Palou’s legal team in their closing argument.

Alex Palou’s Legal Team Closing Argument

Nick De Marco was the senior counsel of Palou’s legal team and led the defense, emphasizing “Broken promises combined with unsubstantiated and grossly overinflated claims; Deficient disclosure practices and Deliberate destruction of key evidence.

In oral closings on November 5, De Marco summarized the trial as a long and expensive war against a young driver who realized too late that McLaren’s promises would not be fulfilled.

“So, I do begin by emphasizing some of the points in the introduction of our written closing,” De Marco said in court. “We start by saying the point 1 really is that this is a surprising case in that McLaren has waged a long and expensive war against a young racing driver, who you will have heard realized too late that the promises that made him join their team were not going to be fulfilled by McLaren.

“Mr. Palou obviously joined McLaren because he wanted to get into Formula 1. That evidence was not disputed by my learned friend and was largely accepted by Mr. Brown. He was racing with the best team and winning races with them. Why else would he go to a second-tier team, except that that team had a very good team in Formula 1 and Mr. Brown was promising him that he would be able to fulfill his career?

“Of course, Mr. Palou has never disputed liability here, despite that, but the kind of moral outrage that my learned friends, certainly in the written submissions, express in terms of the breach here is as overinflated as the claim for damages is.

“This is an industry, your Lordship has noted, in that not only do contracts regularly get renegotiated, but people like Mr. Brown are as successful as they are because they regularly poach sponsors and drivers from rival teams. This is an industry rife with that kind of practice.”

McLaren Contends Alex Palou’s Breach Created Economic Damage To The Team

McLaren Racing CEO Zak Brown contends by breaking the agreement, Palou’s actions financially damaged the company. McLaren is seeking $20.5 million in damages from Palou. Initially, McLaren was seeking $30 million in damages.

De Marco and Palou’s legal team indicated McLaren would have released Palou for $2 million to $2.5 million a few weeks before the breach, so why were they requesting $20 million damages?

“I’m going to return to that point a few times because, of course, that was not a negotiated sum,” De Marco said in court. “It was Mr. Brown’s best starting position at the time. Although he claimed it was because he could replace Mr. Palou in time for 2024, I shall come on to why that doesn’t stand.

“But even if it did, my Lord, what it shows, and this is consistent with the F1 option, is that the whole understanding of the parties here is if you are able to terminate the contract before 1 July in 2003 [sic], you’re able to find a replacement in 2004 [sic].”

Alex Palou’s Team Believes Damage Figure Is Unrealistic

Palou’s legal team also stressed McLaren had over inflated the value of the claim with an exorbitant figure.

“CGR (Chip Ganassi Racing) is not a McLaren,” De Marco said in court. “It’s a family−run business. McLaren is backed by the Formula 1 team, which is a multi−billion-pound (English Pounds) business owned by a Bahraini −− the Bahrain sovereign wealth fund. If the claimants are in any way successful in the kind of claim they pursue against Mr. Palou and the extortionate costs one would expect that is accompanying that in this particular claim, obviously Mr. Palou would never have been able to pay that, but also to the extent that Ganassi has to pick up the bill , that means that there are not −− that that money doesn’t exist in future for Mr. Palou. So, the idea that he is not affected by this overinflated claim is obviously wrong.”

McLaren contended that sponsor NTT discounted its sponsorship because Palou would not be joining the team. Instead, young driver Nolan Siegel from Palo Alto, California was signed because he brought substantial funding for the ride to help make up the financial loss in revenue once Palou did not join the team.

According to Palou’s legal team in the trial, “Siegel brought substantial revenue that more than offset any alleged losses from the breach. McLaren actually profited from the situation they claim damaged them.”

Palou’s legal team contended NTT hadn’t required or demanded those reductions at this point.

Palou’s defense stressed in court that because the driver remained with Ganassi, and Ganassi said the IndyCar team would mitigate his legal losses, it comes at the expense of Palou’s salary. He’s been the best driver in IndyCar the last three years but is not among the highest paid.

“As we have seen the big numbers that have been claimed in this matter is something that I do not have as a person, as a driver,” Palou testified. “There is no way I would have had the amount of money and expenses just to be here today. Although there is that indemnity, as a driver, I know I am not being paid the amount of other drivers. I am not in the top three of the highest-paid drivers, and I am not going to be for the foreseeable future… for this indemnity. I am going to have to pay for it with my base salary in the future and I am already doing it.”

Other Details From The Trial

Other issues brought up in the trial included McLaren intentional deleting messages in “WhatsApp” and emails that could have potentially been used in court.

A request for additional information from McLaren was made late November 5. Any such information regarding Alex Palou and McLaren in this trial will be added in the future.