Stars and Cars

Hamilton signs £100 million deal with Mercedes

posted on May 22 2015 by Kiri Nowak

Hamilton signs £100 million deal with Mercedes

£100 million seems a lot of money just to drive a car and the first question that came to mind when the news broke of Lewis Hamilton’s 3-year deal with Mercedes-Benz AMG Formula 1© team was: ‘How can he be worth that sort of money?’

Whilst the sum has not been officially confirmed there is little doubt that this is near the correct figure. The deal puts Hamilton more or less level with Alonso and Vettel who have seven World Drivers’ Championships between them against Hamilton’s two. On top of that, there will be sponsorship deals and other earnings.

To put it another way, Hamilton is rich and is about to become much richer. He was 19th on the Forbes’ Rich List of athletes in 2013, with Maywether at #1, and is now on his way to challenge him for the top spot.

Mercedes-Benz, which produced some 1,722,600 vehicles last year, are notoriously careful where they invest their earnings. So what made them pick someone from Stevenage? There is a queue of talented drivers who would sign for Merceds-Benz for nothing.

The racing team is jointly owned by Mercedes-Benz - 50% - team boss Toto Wolff - 40% - and Niki Lauda, whose job description seems to vary through the season - 10%. To Wolff, the stability in their driver line-up, with Nico Rosberg under long term contract but now publicly the #2 driver, means that they can concentrate on other matters and design their strategy and cars around their team leader. Rosberg’s intelligent and thoughtful driving style brings in regular points for the World Constructors’ Championship, vital to Mercedes-Benz, so with Hamilton’s win at all costs attitude when behind the wheel, they have an excellent pairing.

Outside of specific national and cultural support, Hamilton is the most recognisable driver in the sport. In 2007 he burst into Formula 1 driving for McLaren, setting a number of records, including becoming the youngest driver to lead the drivers’ championship. Most neutral spectators would accept that he is the one to watch at every race.

The age demographic of F1’s supporters peaks at around the 50s and 60s. Whilst those in control realise this is where most money is, it is obvious that younger fans must be attracted for the long term health of the sport, and Hamilton is one of the few drivers who seems to appeal to them. His bling and patois might be wearing for some but to others he is cool, something lacking in so many others on the grid.

At first glance, £100 million does seem excessive. However, with Mercedes-Benz’ revenue in 2014 being more that £100 billion (read that figure again), a bit over £33 million a year for what they consider the best talent available is quite reasonable. They would certainly not have wanted their man to go to another team.

In a sport where hundredths of a second can make the difference between winning and being an also ran, or between £33 million pa and half that, Hamilton is worth it. It is one thing to have the best car but to put the best driver in it is brand leadership.