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Formula 1

What’s (still) going on with Hamilton’s Mercedes deal?

by Matt Beer
6 min read

With under seven weeks until the start of Formula 1 pre-season testing, Lewis Hamilton and Mercedes have yet to finalise the deal to keep him at the team for 2021, and possibly beyond.

But could Hamilton conceivably not be on the grid for the first race of the season in Bahrain on March 28, and why the delay to this long-awaited deal?

Based on a discussion in the latest episode of The Race F1 Podcast, here is what we know about the situation and the potential implications from Scott Mitchell, Mark Hughes, Gary Anderson and Edd Straw.

Jan 18 : Battle of the rebrands: Aston's early win over Alpine

New owners change the picture – and Verstappen will be watching

– Scott Mitchell

There’s all sorts of speculation surrounding what Hamilton is supposedly demanding. Some say Hamilton is asking for more money, others that he is requesting a reduction in his current outright salary, but in return wants a percentage of the team’s revenue.

I understand why some think, ‘how can you demand that much money when the world is how it is, and Mercedes is having to lay off staff?’.

If you are in the situation Mercedes is and maybe you aren’t sure Hamilton is going to commit, then Verstappen is the driver that you want to get on board

But there are now three very wealthy and equal owners in the team, which means money’s really no object and there’s less responsibility on Mercedes to find a bucket-load of cash for an F1 driver while simultaneously laying other people off.

If you’re Hamilton, and the team ownership structure is as strong as it is, and they all stand to gain an awful lot by winning in F1, and you’re the reason the team’s winning so much…why settle for less?

It’s dragged on too long to brush this off as there being no disagreement whatsoever. But the unique nature of the situation does allow for that, given neither party has a real alternative: Mercedes would have to buy out George Russell at Williams or sign a lesser driver, while Hamilton either signs on the dotted line or leaves F1.

That said, it’s interesting to consider how Max Verstappen fits into all of this as he’s one of the other key drivers who shapes the driver market. Mercedes has chased him before and although he’s signed up to Red Bull until the end of 2023 there will be some break clauses in there if the performance isn’t good enough.

I’m sure he’s looking at the situation with interest. And if you are in the situation Mercedes is and maybe you aren’t sure Hamilton is going to commit, then Verstappen is the driver that you want to get on board at the earliest opportunity because he’s got the ability to win multiple world championships given the right car.

Hamilton has less to lose than Mercedes

– Mark Hughes

Lewis Hamilton

It’s an extraordinary situation. My feeling is that Hamilton is in a position mentally where if he doesn’t get what more or less what he wants, he is ready to walk away from Formula 1 and move on to the next stage in his life. So I doubt it’s weighing heavily on him.

So it comes down to exactly what the sticking point is. Is it about committing for one year rather than three, what does it mean for his post-retirement relationship with Mercedes?

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He isn’t desperate, but he clearly wants to continue on his terms. So that means it’s not a given that he will stay on even though it’s more likely to happen than not.

Mercedes will also want to make sure it happens because while it has Russell available to slot in, it would have to spend money to get him out of Williams. And while winning the world championship would be no problem with last year’s level of superiority without Hamilton, if things are closer it could be very different.

That’s why Mercedes will be the uncomfortable one when it comes to this situation because it stands to lose more by not having Hamilton in the car so that’s where the onus is to get the deal over the line.

Hamilton has to see the bigger picture

– Gary Anderson

Lewis Hamilton

The belief within the Mercedes team will be that Hamilton will stay on but the debate seems to be over the length of the deal. So it’s about how long he wants to commit for – and for how much – rather than whether he is willing to.

But he also has to be realistic because everything is suffering financially in the world given the COVID-19 pandemic. Even with the rule changes and the cost cap, teams are struggling to pull in the necessary money and with Mercedes cutting back on its wider workforce and these challenges he does need to buy into that situation and look at the bigger picture than just what he’s earning.

But it’s in the interests of the three parties that own the team – Mercedes, INEOS and Toto Wolff – to find a solution and get Hamilton’s name on a contract.

It will be interesting to see if it doesn’t happen. If Hamilton decides he’s bigger than the wider picture of the financial challenges then he could end up walking away.

But this doesn’t make that much difference to the job the team is doing. Hamilton is a great driver and not having him would be a big loss, but they just have to keep doing what they are doing and rely on Russell and Valtteri Bottas to do the job.

This feels like brinkmanship now

– Edd Straw

Lewis Hamilton

It’s astonishing that the Hamilton contract situation remains unresolved. Even to get close to his contract running down at the end of 2020 was cutting it fine, but for him to be effectively a free agent well into January with pre-season testing not far off is an extraordinary situation.

For a while last year, it was convincing enough for both sides to say that they wanted to continue but they haven’t had the chance to finalise things. But as that message repeated endlessly and there was always some reason or another not to have got round to doing the deal, it really started to wear thin.

Regardless of how good the relationship is between team and driver, and it is good in this case, this is a business deal like any other and if there was clear common ground, the ink would have dried on Hamilton’s deal months ago.

It has the feeling of a game of brinksmanship now and while the odds are it will be resolved in time, the fact we’re well into 2021 and the situation hasn’t been resolved confirms that there is at least one key sticking point that has yet to be resolved.

Mercedes will be hoping that the situation doesn’t backfire because losing one of the all-time great drivers while he’s still performing at his peak would be careless, while for Hamilton it could cost him a record-setting eighth title.

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