“I cannot believe it. What an amazing day. What an amazing race,” Alex Palou said as he won the Indianapolis 500 in 2025, his voice capturing the disbelief of a driver who had just conquered motorsport’s biggest stage. The four-time IndyCar champion became the first from his country to win the iconic race, doing it at Indianapolis Motor Speedway, a venue owned by Roger Penske himself. It was a crowning moment that defined Palou as a champion. But events off it have now taken a dramatic turn, with a courtroom ruling now threatening to overshadow even his greatest triumph.

UK court delivers costly blow in Palou–McLaren contract dispute

McLaren Racing and Arrow McLaren were awarded more than $12 million in damages after the UK Commercial Court ruled in their favor against IndyCar star Alex Palou, marking the first major judgment in a legal battle that has dragged on for nearly two-and-a-half years.

Justice Picken’s ruling broke down the damages across multiple fronts, including $1.31 million in driver salary, $6.33 million tied to losses from McLaren’s deal with NTT, $500,000 related to Arrow McLaren’s agreement with General Motors, at least $2 million in additional sponsorship losses, and $2.05 million in lost performance-based revenue.

The dispute traces back to October 2022, when Palou signed a contract with McLaren following his first IndyCar championship in 2021. At the time, Palou was already entangled in a separate legal fight with Chip Ganassi Racing, which exercised a team option to retain him for 2023. That earlier conflict ended in mediation, clearing the way for Palou to sign a multi-year McLaren deal scheduled to begin in 2024.

However, in August 2023, amid a dominant stretch that saw him win four races in five events, Palou reversed course and chose to stay with Ganassi. He has consistently maintained that the decision was influenced by uncertainty over a potential Formula 1 opportunity with McLaren, a claim the team has firmly rejected, arguing no such promise was ever made.

McLaren had initially pursued damages exceeding $30 million, later narrowing the figure to roughly $20 million before trial. A significant portion of the claim centered on NTT Data. They were a longtime Ganassi sponsor that shifted to Arrow McLaren under the expectation of reuniting with Palou. However, they have announced their departure after 2026, triggering substantial financial fallout.

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What McLaren, Palou, and Ganassi said after the ruling

In the immediate aftermath of the UK Commercial Court’s decision, both sides moved quickly to frame the outcome on their own terms. In a statement provided to IndyStar, McLaren Racing confirmed it will pursue interest on the awarded damages and seek reimbursement for its legal expenses. This means the case may not be fully closed from a financial standpoint. It has long been understood that Palou has been backed by Chip Ganassi Racing throughout the legal process.

“This is an entirely appropriate result for McLaren Racing,” McLaren Racing CEO Zak Brown said following the ruling. “As the ruling shows, we clearly demonstrated that we fulfilled every single contractual obligation towards Alex and fully honored what had been agreed. We thank the court for recognizing the very significant commercial impact and disruption our business suffered as a result of Alex’s breach of contract with the team.”

Palou, however, focused on what he viewed as an important limitation in the court’s findings. While the judge awarded McLaren more than $12 million, the court declined to uphold McLaren’s Formula 1–related claims, which had once been valued at roughly $15 million. Palou pointed to that distinction as evidence that some of the team’s assertions did not hold up under scrutiny.

“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,” Palou said in a statement.

Chip Ganassi, meanwhile, kept his response brief but unequivocal, stating: “Alex has our full support, now and always.”

From here, the ruling closes one chapter of a saga that has hovered over Palou’s career for nearly three years, even as it opens questions about appeals, final costs, and long-term fallout. For McLaren, it affirms the value of contract enforcement at the top level of motorsport. For Palou, it represents a costly but finite consequence as he continues to build his legacy on track, largely unchanged by the courtroom battle.