McLaren boss 'deceived' Alex Palou about F1 seat, court hears in $20m case

Documents lodged with the court by Palou’s lawyers allege that the claim is “entirely spurious” and “a bare-faced attempt to take Mr Palou to the cleaners”.

However, McLaren claims that the driver himself wouldn’t have to pay up as CGR has agreed to cover costs and damages as a result of contract breach.

Palou was having a tough 2022 season with Chip Ganassi Racing when he signed a deal to join McLaren in 2023, at a similar time to Piastri.

The contract was then deferred to 2024 after a dispute with CGR, but, late in 2023, after Piastri had signed a long-term extension to his McLaren F1 contract, Palou backed out of the McLaren deal entirely and committed his future to CGR.

He says that he felt he had been deceived by Zak Brown leading him on to believe he would be promoted to F1.

McLaren’s lawyers portrayed Palou as a “serial contract breaker” but Nick De Marco KC, representing this year’s IndyCar champion and Indy 500 winner, claimed that Brown was no better.

“Zak Brown enticed Mr Palou to leave Chip Ganassi and join McLaren with no greater regard to the contractual obligations as it is alleged Mr Palou had,” he said.

“He did so in his typical style of negotiating, playing drivers and teams against each other. He was able to convince Mr Palou if he joined McLaren he could really get into an F1 seat.

“Almost as soon as Mr Palou was posting his delight, he discovered Oscar Piastri was posting a similar message, having been recruited by McLaren from Alpine.

Excited to share the news, and looking forward to a future with @McLarenF1 https://t.co/uJKOfUJqVW

— Alex Palou Montalbo (@AlexPalou) July 12, 2022

“It became apparent that Mr Palou had made a mistake by joining McLaren. He felt he had been deceived by Zak Brown leading him on to believe he would be promoted to F1 when that was likely never Zak Brown’s intention.”

By late 2023, Palou had won a championship with Chip Ganassi Racing and the prospect of joining McLaren’s IndyCar team, with no F1 guarantee was unappealing, the court heard.

“The only reason he contemplated joining a second-class team was that his main interest was to go to F1 with the team of many successful racing drivers,” De Marco told the court.

Palou then committed his future to CGR and “went into hiding, refusing to return Zak Brown’s calls,” the court heard.

McLaren was left scrambling to secure the services of its other drivers and renegotiating with existing ones.

Negotiating with a weak hand, it gave Pato O’Ward, its best-performing driver in 2023, a $5.1m pay rise, to avoid losing another top-level talent. Sponsors including NTT and General Motors sought to reduce their fees as they would no longer be associated with the reigning champion, the hearing was told.

“The breach of contract deprived McLaren over a period of four years of the services of the most successful IndyCar driver of the current generation,” said Paul Goulding KC, representing McLaren.

Multiple champion and this year’s Indy 500 winner Palou sat making notes at the back of the court, listening as his achievements were listed.

“He’s described variously as a generational talent, a GOAT,” said Goulding, as Palou failed to stifle a grin. “His record speaks for himself.”

In its argument lodged with the court, McLaren set out how Palou was expected to make McLaren one of IndyCar’s heavyweight teams when he agreed a contract with the team in with a signing-on bonus of $400,000.

“The recruitment of this young, hugely talented star, already an IndyCar champion, was a coup for McLaren. It marked a great advance for a team that was relatively new to IndyCar yet was making giant strides to close the gap on its better-established rivals.

“Mr Palou cynically decided that a big money offer to stay with CGR was more important than honouring his contract with McLaren”

“Mr Palou’s recruitment promised an era of increased success for McLaren, both on and off the track. Mr Palou’s signing resulted in sponsors entering into contracts with McLaren on the basis that he would be driving for the team.

“Yet, late in the 2023 season, Mr Palou cynically decided that a big money offer to stay with CGR was more important than honouring his contract with McLaren. At the same time as he was talking enthusiastically to Zak Brown of McLaren about their future together, he was signing a new contract with CGR behind McLaren’s back. Mr Palou then went into hiding, refusing to return Zak Brown’s calls.

“McLaren was plunged into crisis mode by Mr Palou’s deliberate breach of contract. His unlawful actions caused deep consternation amongst McLaren’s sponsors, whose expectations had been cast aside overnight. McLaren had to find a replacement driver at short notice, yet there was no-one available of Mr Palou’s calibre. Sponsors withheld payments in the wake of Mr Palou’s U-turn and made abundantly clear to McLaren that sponsorship agreements would have to be renegotiated.”

While Palou accepts that he did breach the contract agreed with McLaren, his legal team are arguing that he was misled into signing the deal and that McLaren’s estimate of its losses is too high.

The case continues, and is expected to conclude in November.