IndyCar champion Alex Palou has told a court how he was sold a false dream “based on lies and false impressions” by McLaren, that led to him backing out of a deal to join the team.

Palou agreed to sign for McLaren’s IndyCar team, called Arrow McLaren, in October 2022.

It was later decided he would join McLaren during 2023 to prepare him for Formula 1, in a reserve driver role, but would then link up with their IndyCar team for the 2024, 2025 and 2026 seasons. As part of the deal, he would continue to drive for his existing Chip Ganassi Racing (CGR) team in the 2023 season.

However, in August 2023, he ultimately decided against joining McLaren. He instead chose to remain with CGR, extending his contract with them until 2026.

Palou, who won the IndyCar championship in 2021, went on to win the 2023, 2024 and 2025 drivers’ championship.

McLaren is now suing Palou, claiming it is entitled to around $21million (£15.5m). McLaren denies it misled Palou and says the money claimed represents its losses from him breaching his contract, putting McLaren in a difficult spot with its sponsors who were expecting Palou, a proven winner, to drive for the team. McClaren also argued his departure meant it had to pay more money to other drivers.

Palou does not deny breaching his contact.

However the Spaniard’s legal team are disputing the amount, claiming the figure is exaggerated.

Under cross examination by Paul Goulding KC, for McLaren, at the High Court in London on Friday, Palou explained how his “dream and goal was to drive a Formula 1 car” but when he felt that had become a diminishing and unrealistic prospect, he felt he’d rather stick with his existing team than join McLaren’s IndyCar set up.

In his witness statement, seen by The Athletic, Palou, who had never driven in F1 before, said “the only attraction to me in the approach from McLaren was the chance to go to F1.”

(James Gilbert/Getty Images)

He added: “I now consider that Zak (Brown, McLaren CEO) made me think that there was an opportunity to have the full time F1 seat as a negotiating tactic to get me to sign for McLaren’s IndyCar team.”

Palou told the courtroom: “He (Brown) did promise he was going to give me every single opportunity to be in F1 in 2024 with a full time seat and that did not happen.”

He added: “It’s the only team in the IndyCar series that has the ability to take a driver from IndyCar and put them into Formula 1. That is what he (Brown) told me the idea was.” McLaren had only entered the IndyCar series full-time in 2020.

Palou said “things started to change” when he learnt McLaren had signed Oscar Piastri to drive for their F1 team in 2023, news he found out about on Twitter.

In his witness statement, he explained how he “was very upset, worried and angry that McLaren had signed another rookie driver other than me.”

In his written statement, he claimed Brown told him the decision to hire Piastri was not his choice, but rather team manager Andreas Seidl.

In court on Friday, Palou said: “That (Piastri signing) it’s like ‘wait a minute, that’s not the story I’ve been hearing for many months’.”

Brown, McLaren’s CEO, denied any suggestion of lying and told the court he had been “transparent, open and honest” with Palou. In his written statement, he also cited examples where Formula 1 reserve drivers had been promoted to full-time drivers, such as Oliver Bearman replacing Carlos Sainz at Ferrari.

Earlier this week, the court heard from Brown, McLaren’s CEO, who has appeared in Netflix’s Drive to Survive series.

In his written statement, seen by The Athletic, Brown said Palou’s decision to back out of the contract “came as a real shock to me, and I was in crisis mode.”

He added: “I knew it would create reputational problems, and serious issues with our sponsors, including both General Motors and NTT Data Services.”

Brown has been McLaren CEO since 2018 (Clive Rose/Getty Images)

Under cross examination by Palou’s lawyer, Nick De Marco on Tuesday, and reported by the Press Association, Brown said: “Alex effectively rolled a grenade into the room and let it go off, leaving me to deal with the consequences with our sponsors.”

In his written submission, Brown claimed Palou was his ‘Plan B’ in case either McLaren F1 drivers at the time, Lando Norris or Piastri, got injured. He added how his ‘Plan C’ was to replace Palou with Piastri if the latter’s performances in the 2023 Formula 1 season were below par.

However in court on Tuesday, De Marco accused Brown of “stringing Mr Palou along”, as reported by Reuters, adding how this wasn’t the first time he’d misled drivers with false promises. Brown denied this, saying: “I never strung along Alex.” He also rejected the suggestion he had misled other drivers.

He did, however, admit Palou’s chances of racing for McLaren in Formula 1 had become slimmer because of Piastri’s good form.

Under cross-examination on Wednesday, Brown cited the basketball term “hang around the hoop” and claimed a free practice testing session for McLaren’s Formula 1 (as part of their ‘testing previous car programme’) had put him on the radar of other F1 teams, including Williams and AlphaTauri.

However, in his witness statement, Palou said: “I could see that they were not willing to get me to F1, or help me get to F1 with another team, which was surprising.”

Brown claimed McLaren was left in a “state of chaos” after Palou reneged on his contract and said he was blindsided by him.

“We didn’t have a competitive race car since Alex didn’t show up to work,” he told the court.

There was also a dispute over Palou’s ¢400,000 (£296,000) signing-on bonus, with De Marco arguing that his client was entitled to it as soon as he signed the contract, while McLaren argued it should be returned.

(Miguel J. Rodriguez Carrillo/Getty Images)

On that, De Marco told Brown: “Is this another example of a contract where you say it doesn’t matter what it says, I decided something else?”

Brown replied: “No that’s kind of what your clients seem to interpret in contracts.”

After Palou’s departure, McLaren eventually signed Nolan Siegel, a relatively inexperienced driver, whose family financially contributed to his seat.

Under cross-examination by De Marco, Brown said Siegel driving their car would not impact on their sponsorship deal with main backer, RJ Reynolds Vapor Company.

Challenging him on that, De Marco told Brown: “But your whole case, in these proceedings, is (that) the identity of a driver is essential to the sponsorship of the car.”

Elsewhere this week, Brown was accused of deliberately destroying evidence by De Marco. This included a message, shown in court, where Brown allegedly told team members to “keep everything WhatsApp and then delete.”

De Marco suggested he wanted to destroy evidence related to Palou because he knew he was about to breach the contract.

Brown said: “I was not destroying evidence.” He added that using the disappearing message function on WhatsApp was “normal business policy.”

Under Brown’s leadership, McLaren has seen a dramatic upturn in fortunes in F1, winning the constructors’ championship for the last two years. On Thursday, McLaren celebrated its victory at its headquarters in Woking.

The case, before Mr Justice Picken, is scheduled to last until November, with a written judgement expected at a later date.