Alex Palou and Chip Ganassi Racing end McLaren contract fight after US$12M ruling

Alex Palou celebrates after winning the IndyCar championship Sunday, Aug. 31, 2025, at Nashville Superspeedway in Lebanon, Tenn. (AP Photo/George Walker IV, File)

ST. PETERSBURG — Alex Palou and Chip Ganassi Racing have settled the four-time IndyCar champion’s breach of contract dispute with McLaren Racing, and the Spanish driver acknowledged Friday he mishandled the situation.

Palou in January was ordered by London’s High Court to pay McLaren more than US$12 million after a five-week trial in which the F1 team proved he backed out of two different deals with the racing team.

The team was initially seeking closer to $30 million and said after the ruling it would still pursue legal fees from Palou.

Ahead of the first practice in the IndyCar season, Ganassi said the case had been settled.

“I’m happy to confirm that we have reached a final settlement with McLaren Racing following a UK judge ruling in January,” Ganassi said in a statement.

“I cannot condone what happened and I’m glad the matter is over. With the benefit of hindsight, I hope Alex has learned it’s important to keep good people around him, which he now does, so the events of 2023 are never repeated.”

It is not clear if Ganassi was on the hook for any of Palou’s financial penalties from the fight that began in 2023 when he signed a contract to move to McLaren.

Ganassi said it held the contractual rights on Palou for 2024 and he remained with CGR that year while he was also a reserve driver for McLaren’s Formula 1 team.

Palou was expected to move to McLaren’s IndyCar team in 2025 but did an about-face and decided to stay at Ganassi, where he was won three consecutive championships and four of the last five.

Palou acknowledged in his own statement that he followed poor management advice at the time and said McLaren boss Zak Brown did nothing wrong.

Palou had previously maintained he was misled into thinking he had a chance at one of McLaren’s F1 seats and reversed his decision to leave Ganassi when McLaren signed Oscar Piastri to its F1 team.

“I found myself pulled in various directions and had the wrong people around me back then who I believe did not have my best interests at heart,” Palou said.

“I believe back then that I was provided with the wrong advice or no advice at all. In hindsight, had I reached out to Zak directly, perhaps things may have played out differently.

“McLaren and Zak supported me in many ways, they fulfilled every obligation, went above and beyond and delivered on everything they said in their contracts. I was never misled by McLaren and very much respect their organization.”

McLaren has won the last two constructors’ championships in F1 and Lando Norris added the drivers’ title last season. But, in IndyCar, Ganassi has had the superior team and Palou did not want to leave for what he perceived as a lesser ride in that series once he felt he had no opening into F1.

Jenna Fryer, The Associated Press