What a one-year deal means for Hamilton, Mercedes and the 2022 F1 driver market

With little over a month to go until the start of the 2021 Formula 1 season, the reigning world champion’s presence on the grid has finally been confirmed. 

On Monday morning, Mercedes announced that Lewis Hamilton had put pen to paper on a new one-year contract to remain with the team for the upcoming 2021 season, concluding the long-running saga over his future. 

The confirmation of Hamilton’s renewed commitment to Mercedes followed months of delays during an intense 2020 season held amid the COVID-19 pandemic. 

COVID-19 had already made talks difficult with 17 races taking place across a congested six month period. Mercedes and Hamilton’s focus quickly shifted onto winning the titles, and any hope of thrashing out a deal before the end of the season was effectively curtailed when Hamilton tested positive for coronavirus at the penultimate race in Bahrain in November. 

It wasn’t until the Christmas week that Hamilton and Wolff sat down to properly discuss the contract. On 1 January, Hamilton officially became unemployed, but six weeks later he had signed the dotted line to secure his place on the 2021 F1 grid, shutting down any wild rumours or speculation. 

What’s behind the deal for Hamilton? 

Naturally, such delays prompted the rumour mill into full swing. Despite claims of huge salary demands, a potential revenue share of Mercedes incomes, and a driver veto that would prevent Hamilton being partnered by another superstar driver like Red Bull’s Max Verstappen, all such suggestions were dismissed by Mercedes team boss Toto Wolff as “baseless” rumours. 

Wolff insisted that money "wasn’t the sticking point” in the negotiations, with Hamilton recognising the difficult economic picture brought on by the coronavirus pandemic throughout contract talks. Indeed, back in August the Briton admitted he felt uncomfortable negotiating a new big-money deal in light of rising job losses around the world. 

Mercedes cited that the launch of a joint-charitable foundation - adding to the diversity and inclusion programme the German manufacturer commenced last year - played a “significant part” of the new agreement, something which Hamilton is greatly passionate about. According to Wolff, the idea was jointly devised by Hamilton and Daimler CEO Ola Källenius. 

While Hamilton’s extension ultimately came as no surprise, the length of the agreed deal - just 12 months - certainly raised some eyebrows.

A one-year deal goes against Hamilton’s comments last July about his desire to stay in F1 for “at least three more years”, possibly suggesting that Hamilton might have been forced into some kind of compromise by Mercedes. 

But Wolff was quick to play this down and explained that the short duration of the contract was a “joint” decision. Both parties are set to put time aside to talk 2022 and beyond once the 2021 campaign has got underway. 

In the meantime, the focus for Hamilton will now turn to his record-breaking quest to win title number eight…

Where does Mercedes stand? 

Mercedes will be happy to have put an end to speculation in the knowledge it gets to keep the best driver on the grid for at least another year, retaining stability within its line-up as it seeks to continue its 100 percent winning run in the V6 hybrid era. 

But what happens for 2022 and beyond is anyone’s guess at this stage. Both Hamilton and teammate Valtteri Bottas have deals that run until the end of the year, and Mercedes faces the challenge of a major regulation overhaul in 2022. 

While Bottas was already heading into the new season knowing he needed to bounce back from an underwhelming 2020 campaign and prove to Mercedes he is indispensable for 2022, Hamilton’s future very much rests in his own hands.

“Lewis needs to decide what his future holds for him,” Wolff said.

“On the other side, the team needs to decide long-term what we are going to do about drivers. 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 that we imagine from 2022 and onwards?’ Our first discussions are going to be with Valtteri and Lewis, in respecting our values of loyalty and integrity. 

“On the other side, young drivers are the future, and therefore we need to consider how we want to set ourselves up for the years beyond.”

What about the 2022 F1 driver market?

As Wolff alluded to, a short-term contract for Hamilton keeps the door open for the prospect of another fascinating F1 driver market picture this year. 

While Mercedes will be keen to avoid a repeat of what happened this year, should Hamilton ultimately decide to call time on his F1 career at the end of the 2021 season, possibly after securing an unprecedented eighth world title, then Mercedes will find itself with a huge dilemma heading into F1’s new era. 

Would it keep Bottas for some continuity and finally promote its highly-rated junior George Russell - who is entering the final year of his Williams contract - or shake things up altogether? 

In the past Wolff has quashed talk of Mercedes being interested in Verstappen, but the Dutchman would undoubtedly be on the team’s radar in a scenario where Hamilton walked away from the sport. 

Verstappen has long been considered the driver that is best-placed to take Hamilton’s crown, and despite holding a contract until 2023, he might well find himself angling for a Mercedes move if he gets a sniff that Hamilton might leave, especially so if Red Bull fails to give him what he needs to fight for the title this year. A Verstappen-Russell line-up at Mercedes in 2022 would certainly make for a mouth-watering prospect. 

With a number of drivers including Bottas, Russell, Sergio Perez, Esteban Ocon, Pierre Gasly, and Alfa Romeo duo Kimi Raikkonen and Antonio Giovinazzi all out of contract at the end of 2021, the coming silly season was already set to be intriguing. 

It is even more so now that Hamilton looks to hold the key to it.