Editor’s Pick: The complications surrounding Lewis Hamilton’s contract with Mercedes

After making history in 2020, Lewis Hamilton’s contract stalemate with Mercedes is mind-blowing due to various complications.

For seven-time F1 World Champion Lewis Hamilton, 2020 was an exceptional year. Not only did he become the most successful Formula 1 driver of all time, but he was also knighted for his sporting record, and social contributions in the UK and overseas. However, Sir Hamilton’s 2021 F1 journey does look anything but straightforward.

Given his spectacular performance for Mercedes since 2013, he was expected to continue his glorious run with the team in 2021 as well. In December, Mercedes hinted towards Hamilton signing a new contract with them soon since his previous contract was supposed to end on January 1, 2021.

Since the comment from Mercedes, Hamilton’s contract has expired. Mercedes has not confirmed his new deal yet, which bizarrely means Hamilton is no longer a part of the team until further notice. So, what exactly happened here?

Throughout the 2020 season, Hamilton and the Silver Arrows made it clear that a new deal will happen as soon as some issues are cleared. This remained the case even when they re-signed Valtteri Bottas to a one-year extension in early August, despite his nine wins compared to Hamilton’s 42 wins in four years. Everything was still considered to be on track until the beginning of 2021 when reports emerged stating that the four-year deal worth $50 million/year was blocked by Daimler, the parent company of Mercedes. The corporation is apparently citing concerns about Hamilton’s contract length and ambassadorial rights. They reportedly want to renegotiate with the legendary drive for a two-year deal with an option for third year.

This new development can end up jeopardizing Hamilton’s successful career because if he does not sign with Mercedes and remains a free agent, he won’t be able to compete in the upcoming season as 19 of the 20 seats on the grid for 2021 have confirmed drivers. Although the FIA has Hamilton’s name on its entry list for the season as a Mercedes driver, the contract signing is extremely crucial for him to participate.

Wages is not the only hurdle in negotiations

Hamilton’s wages are not the only hurdle for Mercedes to overcome to keep the star driver for next season. The seven-time F-1 world champion reportedly has a list of demands that needs to be satisfied to sign the new deal.

Along with an eye watering 200 million in wages over four years, Hamilton wants 10% of the money earned by Mercedes if they win more championships in the next four years. He also wants a limited production AMG one car along with a role that will keep him at a much higher pedestal rather than just considering him a driver and testimonial. Hamilton’s record in F1 Championships gives him the edge in negotiations, but Mercedes have a lot of thinking to do in the next one month to meet these demands.

Brand damage for Mercedes if Hamilton doesn’t extends contract

The previous contract for Hamilton was worth $40 million/year. Considering his remarkable achievement, he deserves a much bigger contract. Hamilton is also considered the most marketable driver in the sport with brands like the telecom Vodafone and Tommy Hilfiger in his endorsement portfolio. Losing him won’t be a smart option for Mercedes given Hamilton’s track record and brand value.

However, the concerns of Mercedes regarding a long-term contract are also understandable. Committing to such a heavy investment during the pandemic may create a hole in the finances of the team. The current stalemate might eventually be solved, but Mercedes will be looking for a middle ground where all parties are benefitted.

Considering the willingness of all parties for an extension, it looks like a matter of time before they get on the table and sort the deal. In fact, team principal Toto Wolff has reportedly stated that Hamilton may not have a new contract until the night before preseason testing in March.

In the worse possible scenario, if the deal does not happen, Mercedes will be lining up with George Russell, the Mercedes junior who filled in for Hamilton at the Sakhir Grand Prix and performed spectacularly. The latest report from Correiro Dello Sport suggests that two parties are inching toward a conclusion in talks as Mercedes is likely to oblige to Hamilton’s demands. Nevertheless, it has been a complex and tricky situation for Mercedes, but they need to keep hold of Hamilton.

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