THE TRUTH ABOUT THAT CONTRACT…
The Formula 1 world reacted with surprise when it learned Lewis Hamilton’s long-awaited new Mercedes deal guarantees his presence on the grid only until the end of 2021. Both parties claimed publicly they were happy with the arrangement, but is there more to it than that?
IN the midst of a global pandemic which has claimed over 2.6 million lives, the past winter’s agonised speculation over Lewis Hamilton’s new contract with Mercedes sometimes felt irrelevant and detached from reality.
Hamilton said as much when asked about a noticeable reduction in social media posts. “I was taking time for myself,” he said. “It wasn’t the easiest of breaks. I continue to be conscious of what is happening in the world. Posting pictures and celebrating a thing such as a contract being signed is not really important to me.”
In the absence of hard news, the vacuum was filled with speculation ranging from a driver and team at loggerheads over money through to claims of Hamilton demanding the right to a ‘Verstappen Veto’.
That Max Verstappen might be Brackley-bound to join or replace Hamilton at some point in the next couple of years was given additional credence by no lesser a man than Red Bull team principal Christian Horner, certain – he said – that the Dutch ace is top of Toto Wolff’s list of future drivers.
It seems doubtful that Hamilton lost much sleep over this. That he would re-sign seemed certain, yet when the announcement finally came through on Monday 8 February it raised eyebrows, questions and the intriguing possibility that 2021 might just be the seven-times world champion’s final season with the three-pointed star.
Despite the announcement including details of a long-term arrangement for Hamilton and Mercedes to develop a charitable foundation aimed at building on their joint commitment to increasing diversity and inclusion in motorsport, the focus for the world’s media inevitably fell on the details of the driver agreement.
So late was this contract renewal that it could not even be described as a one-year deal.
‘I’M KIND OF IN A FORTUNATE POSITION WHERE I’VE ACHIEVED MOST OF THE STUFF THAT I’VE WANTED TO ACHIEVE UP TO THIS POINT, SO THERE’S NO REAL NEED TO PLAN TOO FAR AHEAD IN THE FUTURE” LEWIS HAMILTON
As though in deference to #LH44, only 44 weeks separates the announcement date from the conclusion to the 2021 world championship in Abu Dhabi;
10 months during which Britain’s record-breaking Formula 1 driver must determine whether or not to be part of a brave new era determined by Formula 1’s forthcoming 2022 regulations reset.
According to Wolff his star driver has the option to continue, yet somehow the negotiations between them resulted in a much shorter extension than anticipated.
An insight into the wider factors impacting the negotiation was revealed in Wolff’s admission to the media that “there are uncertainties in the world that affect the way that sport can operate, that have an influence on our revenue, TV monies, on sponsorship income. [At] Daimler, Mercedes is in a huge transformation towards electric mobility, and that means investments. So, we are in a financial reality that is very different to what it was a few years ago.”
With Daimler investing £60billion focused on electrification and digitalisation between 2021 and 2025, and the Formula 1 team subject to the three-year glide path which will take the initial USD$145M budget cap down to USD$135M, there is little doubt that Wolff is keen on future driver salaries reflecting a ‘new normal’.
The proposed (and controversial) 2023 driver salary cap of USD$30M is around one-third of the figure that Hamilton was reported to be demanding, fanciful though that sum appears.
Whatever the exact figure, it is indisputable that the new agreement was exceptionally late in being signed. Late by the standards of any driver contract, never mind the renewal agreement of a man who has won 74 grands prix (at the time of writing) and six world championships for Mercedes since 2014.
For his part, Hamilton dismissed the unusually short contract extension as being symptomatic of a period of uncertainly throughout the world. A time which has caused him to reflect on priorities, including simply racing in 2021 before making longer term decisions.
‘I’m kind of in a fortunate position where I’ve achieved most of the stuff that I’ve wanted to achieve up to this point,” he said at the launch of the Mercedes W12, “so there’s no real need to plan too far ahead in the future. We live in quite an unusual period of time in life, and I just wanted one year. Then we can talk about [if] we do more, and keep adding to it if we have to.”
PRE-COVID, the position among those closest to Hamilton was that negotiations for 2021 would most likely involve a ‘two plus one’: a firm two-year extension with an option for 2023, at which time Hamilton will be 38 years of age. Ultimately, Lewis has agreed to a ‘one plus one’.
Team boss Wolff was quick to dispel any suggestion of a difficult negotiation and below-par deal for either party.
“We jointly agreed on a one-year deal,” he said simply. “First of all, there is a substantial regulation change in 2022. We also want to see how the world develops, and the company, and on the other side because we kept it very late.”
The principal culprit in relation to the timing of the deal appears to be the global pandemic in terms of the disruption it wrought within F1 and the direct impact it had on Hamilton and Wolff, both of whom contracted the virus.
Hamilton was struck down by it at the end of November, famously causing him to miss the Sakhir GP and giving George Russell – managed by Wolff, remember – a near-fairy tale opportunity. The Mercedes team principal then announced he had tested positive for the virus after Christmas, forcing him to quarantine at home in Austria.
It was against this backdrop that the already-delayed negotiations became carved out “via video conferencing between Christmas and the end of January,” according to Wolff. “We wanted to discuss the contract at the end of the season between the Bahrain races and then, obviously, Lewis didn’t feel well.”
The timing of Hamilton’s COVID-19 diagnosis could not have been worse; Russell’s Sakhir performance was an unwelcome development prior to proper negotiations getting underway. Although Russell did not become a threat to Hamilton’s seat for this season, he most definitely forms part of his manager’s long-term plans.
The pandemic had already pushed negotiations back several months.
The delayed start to the 2020 season meant those useful face-to-face chats which often take place in the paddocks of Barcelona and Monte Carlo in May never happened.
Once the 2020 season got underway in July, the rhythm to the world championship was more intense than usual – with 17 grands prix compressed into 24 weeks. Negotiating new contracts is ultimately best done away from the spotlight and tension of race weekends, even if general terms have been suggested over a cafe latte or two in the motorhome.
For drivers who appoint a manager to look after their business affairs, regular conversations with team principals are the norm. Hamilton, however, makes his own decisions, and has done since setting up his own ‘Project 44’ management business in London at the end of 2014.
Originally managed by his father Anthony, Hamilton spent four years with Simon Fuller’s XIX Group before joining William Morris Endveaour, which helped build his profile in the United States. It was through Project 44 that Hamilton negotiated his contract renewals with Mercedes in 2015 and 2018, however.
A key figure in all this has been Marc Hynes – former racer, friend and confidante to Hamilton as well as a director of Project 44 since January 2016. As gate keeper to the Hamilton management business, Hynes was tasked with handling the myriad enquiries and business opportunities which inevitably come the way of a multiple world champion.
Hynes will undoubtedly have been providing advice during the winter negotiations. It is therefore notable that he and Hamilton have parted company. Indeed, Hynes’ resignation as a director of Project 44 occurred on 22 January, during the very month in which the renewal talks were taking place...
Although the split has been described as amicable, the timing of that allied to the subsequent lateness and length of the renewal contract suggests a degree of turbulence. No one operating at Hamilton’s level wants to have short term deals concluded at the eleventh hour.
His shock decision to quit Mclaren and join Mercedes in 2013 was announced in September 2012, for example. That agreement had a three-year term which was repeated when his second contract with the Silver Arrows was announced at the 2015 Monaco GP – one third of the way into the season.
The next contract renewal was announced in July 2018, on the eve of the German GP, this time for two years covering 2019 and 2020.
To now have an extension which starts and ends within the same calendar year can only be seen as less than ideal. Those three-year deals became two, and now one… Wolff and Hamilton insist that, this year, they will not leave their discussions so late.
“We have agreed that we want to pick up the discussions much earlier this year,” confirms Wolff, “to avoid a situation like we had in 2020, to run out of time and be in the uncomfortable position that there is no time left before the beginning of the season.”
The option to continue, however worded, clearly requires some further negotiation.
On that basis the next round of discussions between Wolff and Hamilton can only be a short time away. The potential for distraction and tension to disrupt Hamilton’s season is clear, so while both parties remain bullish about the strength of their relationship, it seems clear we are in uncharted water as regards the future of Formula 1’s dominant partnership.