MOTORSPORT: Mega Mercedes deal for world champ

Mercedes has extended Formula One world champion Lewis Hamilton's contract with its factory team for three years in a deal that looks likely to make him the sport's highest-earning driver other than Michael Schumacher in his heyday at Ferrari.

While no figures have been officially announced, reports out of the F1 paddock in Monaco put Hamilton's new base salary at up to US $42 million (AUD $53.3 million) a year, with huge bonuses and endorsements potentially on top of that.

The deal had been coming for months but details had to be finalised as Hamilton negotiated himself, having dispensed with personal management.

It ends any prospect he might have joined Ferrari next year in place of Kimi Raikkonen and as a teammate to Sebastian Vettel.

Only Fernando Alonso, back at McLaren after five years at Ferrari, and Vettel are in Hamilton's league as a money-earning drivers in F1.

But Hamilton may have overtaken fellow dual world champion Alonso on the pay scale now, with Vettel in third spot despite his four world titles – with Red Bull in 2010-13.

Seven-time world champion Schumacher reportedly earned about US $50 million a season for many years at Ferrari, but did not make anything like that in his comeback with Mercedes after a three-year retirement.

Schumacher is now confined to his Swiss home with severe head injuries after a skiing accident in France in late 2013.

Hamilton, who is leading teammate Nico Rosberg by 20 points ahead of this weekend's Monaco Grand Prix and on course for a third title, said he envisaged continuing in F1 and with Mercedes beyond his contract to the end of 2018.

Now 30, he was groomed through his childhood karting career by then Mercedes-powered McLaren, which brought him into F1 in 2007. He almost won the world title in his first season and got the job done the next year.

After 21 wins with McLaren in six years he switched to the Mercedes factory team in place of Schumacher, who had not added to his record 91 GP victories in his three-year comeback.  

Hamilton has won another 15 GPs with Mercedes and beat Rosberg to last year's title in a tense fight that went to the wire.

"Mercedes is my home and I couldn't be happier to be staying here for another three years," Hamilton said.

"This is a company filled with real passionate racers, from the board room to the factory floor, and an incredible hunger to win.

"Even after the success of last year, that hunger is greater than ever – and it's the same for me, too.

"The Mercedes car I am driving right now is the best I have ever had in my career – it's just so much fun to be out there every weekend, on the limit and fighting to win at every track.

"Mercedes-Benz began supporting me in 1998, so I am very proud this contract means I will mark 20 years with Mercedes in 2018."

Mercedes has dominated F1's V6 hybrid era that began last year and is well-placed to continue that, even with a likely rules shake-up in 2017.

"When I joined the team they were going through the planned changes to where we have got to now," Hamilton said.

"I of course analysed where the team's plans are going forward, so that was why it was quite an easy decision [to sign a contract extension]."

Mercedes motorsport boss Toto Wolff had made retaining Hamilton his priority.

"Continuity is one of the key factors for delivering success in F1 and we now have that in place [with Rosberg also contracted long-term]," Wolff said.

"We have taken the right amount of time with the [Hamilton contract] process and not rushed ourselves.

"The result is a strong agreement that will enhance Lewis' association with the Mercedes-Benz brand and that recognises and respects the market value of Lewis and of Mercedes in F1.

"Lewis' sporting track record speaks for itself and he is a great personality for the company.

"I am looking forward to continuing to race with the strongest driver pairing in F1 and to more historic achievements together."