Why has Hamilton only signed a one-year extension?

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For months Formula One fans have been spamming Mercedes’ social media accounts demanding to know when the team planned to #AnnounceLewis for 2021.

Technically, Hamilton has been out of contract since January 1 when his previous two-year deal lapsed, although there was very little concern that he would not continue this year.

The fans just wanted clarity and confirmation.

On Monday that confirmation finally dropped, but with it came a surprise. Unlike his previous multi-year contracts, this deal was only for one year.

It was never really in doubt that Hamilton would continue to drive for Mercedes this year. There were no spaces left at other teams and the best team on the grid was not going to shun its seven-time world champion.

Perhaps Hamilton could have turned his back on the sport entirely, but with a record-breaking eighth title up for grabs — and his own place in F1 history ahead of Michael Schumacher on seven championships — it would have been a remarkable decision.

Speaking via an online press conference on Monday, team principal Toto Wolff said “there was never a moment where we thought he wouldn’t sign and there was never a moment where he doubted [he would sign].”

So why the long wait?

First of all, negotiations started way later than Mercedes or Hamilton had planned. Initially the two sides delayed talks due to the coronavirus pandemic, which condensed a 17-race schedule into six months and, due to social distancing measures, made it difficult to sit down face to face away from the circuit.

What’s more, both sides trusted the other one wanted to continue in 2021, so as the season progressed there was no urgency to put pen to paper.

It seemed sensible for Hamilton to focus on securing his seventh title first, so negotiations were initially kicked back to the final three races of the season in the Middle East.

But after winning the first of the those races — the Bahrain Grand Prix in November — Hamilton contracted COVID-19 and was forced to self-isolate and sit out of the Sakhir Grand Prix, which was the penultimate race.

After a swift recovery and ten days in isolation in Bahrain, he made it back to the F1 paddock on the eve of the final race weekend in Abu Dhabi — but again racing took precedence over sitting around the negotiating table.

That delayed the start of negotiations until the week before Christmas, less than a couple of weeks before Hamilton’s previous two-year deal was due to lapse at the end of 2020.

Again, both sides remained calm knowing a deal for 2021 was never in doubt, but committing to anything longer-term required consideration of a number of other factors that Wolff, who also caught COVID-19 in January, says were not simple to resolve in the time left on the table.

In the end, a decision was taken to sign a deal for 2021 and postpone talks about 2022 and beyond to a later date.

“We jointly agreed on a one-year deal,” Wolff said. “First of all, there is a substantial regulation change in 2022 and we also want to see how the world develops, and the company.

“On the other side, because we kept it very late, we wanted to discuss the contract at the end of the season between the Bahrain races and then obviously Lewis didn’t feel well and in the end we started our negotiation and conversation just before Christmas and it was important to get it done as soon as possible.

“In that respect, we thought let’s postpone the conversation about 2022 and onwards to a later stage in 2021.”

The plan is to set an earlier date this year to pick up negotiations, but it’s still not entirely clear which factors are preventing a long-term commitment coming together. Wolff mentioned new technical regulations for 2022, which pose the biggest threat to Mercedes’ dominance of F1 going forward, but a new financial reality after the pandemic appears to be the central factor.

“There are uncertainties in the world that affect the way that the sport can operate and they can have an influence on our revenue, on TV money, on sponsorship income,” Wolff explained when pushed on what might change between now and the next set of negotiations.

“Mercedes is in a huge transformation towards electric mobility and that means investment. So we are living in a financial reality that is very different to what it was a few years ago.

“But having said that, we are totally in line, Lewis and me and the wider group in Mercedes, about the situation. There was never any discrepancy in opinion, it’s just that we got a good signature on the 2021 contract because we need to get going and then find some time during to 2021 — earlier this time around — to discuss the future.

“It’s not just specifically to 2022 but also beyond. That is not something that we wanted to carve out via video conferencing between Christmas and the end of January.”

But Wolff stressed that the reason for the staggered negotiations was more complicated than simply the financial figures in the contract.

“Lewis has always recognised that this is a very difficult period,” he added. “Difficult for everybody, difficult from a health point of view, there’s much more important topics than Formula One racing, and also the auto industry is in a transformation phase.

“So the money topic wasn’t the sticking point. It was more about [getting a deal done to] let us get going quickly for 2021.”

Wolff also took the opportunity to deny rumours Hamilton was holding out for a veto over who his future teammate might be after Valtteri Bottas, who also has a one-year contract to drive with Mercedes until the end of 2021.

“On the specific clauses that were out there in the media, I don’t know where it came from because none of that is true,” he said. “I actually read about this, I found it an interesting perspective.

“But the truth is there was not a second of discussion about any driver-specific clause. He has never asked for that in the last eight years and it’s a team decision.

“The other clause [suggested in the media] about Lewis receiving a revenue split or revenue share, that rumour was baseless too. So none of that was ever part of our discussions.”

Could Hamilton walk away from F1 at the end of 2021?

A lack of a contract beyond the end of this year gives Hamilton the option of leaving the sport at the end of the season. By that time he could be an eight-time world champion, making him the most successful Formula One driver of all time and offering a rare opportunity to bow out at the very top.

“I think this is very much Lewis’ decision,” Wolff said. “As long as he enjoys racing, I think he is very capable of going longer.

“He develops as a driver, he looks after himself in terms of physical training and mental preparation so I don’t think that in terms of ability that ends in 2021, but in the end, it’s his decision.

“I think Lewis needs to decide what his future holds for him, which is why I wouldn’t want to comment on where Lewis stands.”

One indication that Hamilton intends to stay with Mercedes beyond 2021 is the creation of a charitable foundation to improve diversity and inclusion in motorsport as part of the new contract. Both Mercedes and Hamilton were F1’s core champions of such causes in 2020, but such change is very much a long-term commitment.

The joint foundation between Hamilton and Mercedes, which was originally suggested by Ola Kallenius, CEO of parent company Daimler, suggests Hamilton intends to remain involved with Mercedes on some level for years to come. That involvement could be in an ambassadorial role rather than a driver, but it does suggest Hamilton has no plans of leaving Mercedes for another team in F1.

Of course, Mercedes has to look after its own interests too and will be making plans beyond Hamilton — even if he chooses to sign another deal for multiple seasons beyond 2021. Key to those plans will be George Russell, who is currently on loan from Mercedes to Williams but will be free of his Williams contract at the end of the year.

Russell stood in for Hamilton at last year’s Sakhir Grand Prix, confirming the potential Mercedes suspected he had when they first started investing in his career in 2016, and marking himself out as a star of the future.

Wolff said Mercedes will speak with Hamilton and Bottas first in any contract talks over 2022, but that doesn’t rule out bringing Russell into the team to coincide with F1’s regulation overhaul at the start of next year.

“The team needs to decide long term what we are going to do about drivers” Wolff said. “Valtteri and Lewis have our 100 percent commitment and loyalty for 2021, we will support them with everything we have.

“We will then look beyond this year and say what is the line-up we imagine in 2022 and onwards. Our first discussions are going to be with Valtteri and Lewis in respecting our values of loyalty and integrity but on the other side, the young drivers are the future and therefore we need to consider how we want to set ourselves up for the years beyond.”

For that reason, the hands held by both Mercedes and Hamilton during their 2022 contract negotiations are unlikely to change from the ones that forged the deal announced on Monday. Whatever was preventing more than a single year deal this time round will still be there for 2022, but ultimately there will be more time to find a solution that suits both sides.

“For me, he’s the best driver,” Wolff said. “He has a huge global following, much beyond the racing fan and he’s won seven championships — without making major mistakes in the last three years. “Like many in the team, and the wider organisation, he’s an important pillar of the team’s success. On the other side, Lewis recognises he is one of 2000 that we have within our team — engine and chassis — and that it is not two superstars, but 2000 superstars and each of us contributes to the team’s success.

“And then because he has this helicopter perspective of the wider world out there, it was a very tough year, for us personally, from a health standpoint, and also from an economic standpoint, so he knew even though he has delivered from his side, there is an economical reality out there that is important to respect.”