#driver contracts

Warning! Long Post alert!

Alonso is getting paid a fortune by McLaren because McLaren usually pays better than Renault, plus he's won two championships. Raikkonen is getting paid a king's ransom to act as an incentive to leave McLaren's comfy confines plus Ferrari expects him to be the next Michael Schumacher. I might as well add that Sato's getting a huge payment next year because Super Aguri expect him to make them a respectable team. The amount a driver earns in a given contract period depends on the following:

1) the driver's performance in the 12-18 months before the contract was signed. Alonso and (probably) Raikkonen will be earning based on 2005 and Sato based on 2006. Some others - for example the performance part of Button's current retainer [-] is [are] based mostly on 2004.

2) the team's expectations of the driver's performance in the next contract period. This is why Raikkonen's and Sato's salaries have jumped - the former is expected to perform much better on-track in 2007 and the latter is expected to perform much better off-track in 2007 (in terms of technical feedback and so on).

3) the respective skill of the team negotiators and driver manager. If the former are stronger, the driver's salary will be low. The most notable example of this is Renault, where Flavio Briatore managed to pin both Alonso and Fisichella onto $9m/year salaries for 2005-2006. As McLaren is now demonstrating, Alonso would have earned more than $9m/year on the open market.

Where the drier manager has the upper hand, then otherwise-inexplicable salaries can appear (e.g. Willi Weber overpowering Toyota's negotiators to give Ralf Schumacher a salary between $19m and $25m per year).

4) Marketing value. Being successful is valuable and this must surely be helping to fuel Alonso's salary. However, this is not always the whole story - the 1997 championship was not Jacques Villenueve's entire marketing value to BAR, and the entire pay-driver market these days is based upon marketing value. Neither is it an accident that Red Bull drivers are going to occupy the Toro Rosso seats - we just don't know which ones yet.