“I’m paying for it with my base salary”: Alex Palou reveals major financial impact from the $20M McLaren lawsuit

Four-time IndyCar champion Alex Palou was set to make a move to McLaren when he failed to honor the contract and decided to stay with Chip Ganassi Racing, which triggered a lawsuit from the Woking-based team. As the Spaniard arrived in the UK for a court date, he revealed the financial impacts of the McLaren lawsuit.

Alex Palou signed a contract with McLaren for the 2023 season, which gave him the role of the F1 reserve driver as the Spaniard wanted to fulfill his F1 dream. However, Palou already had a contract with CGR for 2023, and a negotiation between the teams meant he would join Arrow McLaren in 2024.

However, McLaren had already signed Oscar Piastri and Lando Norris on long-term contracts by then, and Alex Palou refused to honor the McLaren contract, which triggered what was believed to be a $30M lawsuit, but as per the latest reports is a $20.7M lawsuit from the Papaya team for compensation against the losses caused by Palou deciding not to make a move.

NTT IndyCar Series Honda Indy 200 at Mid-Ohio - Source: Getty

Alex Palou arrived in the UK for a court date in the McLaren lawsuit. The Spaniard detailed how Chip Ganassi Racing confirmed to pay the cost of the lawsuit, but how the same also hindered his salary in the series. Detailing its impact, he said:

“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. There is no way I would have had the amount of money and expenses just to be here today.” (via Motorsport Magazine)

“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,” he added.

Colton Herta was the highest-paid driver in the series in 2025 at a reported salary of $7M, and Pato O'Ward followed in his footsteps with a two-year contract set at $10.2M.

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Impact of Alex Palou’s decision not to join Arrow McLaren in the NTT Data deal

Just weeks after Alex Palou first signed the Arrow McLaren contract, NTT Data, which previously sponsored Chip Ganassi Racing, also signed with the Papaya team. However, the deal was signed under the pretense that Palou would be joining the team.

But the Spaniard decided against joining the team, and as a result, what was initially going to be a six-year contract with NTT Data had to be reduced to a four-year deal, giving the Japanese multinational the opportunity to leave after the 2026 season.

The renegotiated deal led to losses for both Arrow McLaren and the McLaren F1 team, as it resulted in a reduced annual sponsorship for the IndyCar team and lost sponsorship benefits for the F1 team. Recent reports suggested that NTT would be parting ways with Arrow McLaren after the next season.