137 replies to this topic

[Ross Stonefeld]

From July 03 issue of Business F1's Power Rankings 2003. Top 150 people in F1. Which is a joke really since Raikkonen is listed as 11th However this caught my eye

Details of his five-year Mclaren contract have leaked in the paddock, revealing that he will be paid US$50million for his fifth year with Mclaren....

[Piif]

Unbelievable. IF the figure is true that is. Would be interesting to hear what he makes in seasons 1-4... But anyway, no kid that age deserves salary that high.

[Vagabond]

Why would Ronzo pay such a salary?

[Ross Stonefeld]

Can Mclaren-Mercedes afford him? Yes

Can they afford to lose him? No

[FNG]

Who knows what the whole contract is? Year 1-4 could be worth 1 million a season. Average that with the 50 million for the last season and he is making $10 million a year which sounds about right.

[Jackman]

BizF1 reported this in their first issue:

Kimi Raikkonen's five-year contract with McLaren Mercedes is $2m/$4m/$6m/$8m pay-packets in years one, two, three and four. But in year five there is a whopping obligation for Ron Dennis to pay him $50 million if he opts to keep him. US$50 million would place him right above Michael Schumacher and make him the highest paid driver in motor racing history.

[Double Apex]

This is bizarre, the guy has only won one race so far!!!

[Double Apex]

Originally posted by Jackman
BizF1 reported this in their first issue:

OK, so those first four years make sense, but what about that last year! What a weird deal

[Just me]

Guess no KR in McLaren in 2006 then:D

[pRy]

$50 million for one year or for an extension of futher years totalling $50 million?

[Jodum]

Holy ****...

Kimi's Manager must be a [filthy rich]genius (he also used to manage Jenson)

How on earth did Ron get suckered into paying such a whopping salary? There has to be some sort of long term obligations to it (say "i'll pay u 50mil this year to gaurentee another so-and-so years with this team, at the end of this year we will talk about the monetary contract at a later date")

It actually may be a smart move by ron because it means that Kimi would never want to leave McLaren for another eam on the basis of getting a better paying contract. And perhaps Ron is so secure of his teams ability to compete at the highest level (which he has done for as long as anyone can remember), that he is positive that Kimi would never want to leave on the basis of not winning or competing enough plus Ron and Kimi get along great... so, perhaps Ron was able to think ahead enough to lock F1's brightest prospect (who has also lived beyond his hype by challenging Schumacher for the '03 championship at only 23 years old) for pretty much the rest of his career (or perhaps just his peak years, OR to clinch a couple of championships)
-> If the above pans out (say Ron pays kimi $50mil for hsi fifth year, and say for the next 4 years Ron pays him another $15mil a year, and in the process clinches 3 or 4 chamipships with Kimi I think the deal would be worth it, b/c with all those wins equals more sponsorship/F1 revenue Money so maybe his huge payment to Kimi pay pay for itself) I think it would be a very ingenious move

Alot of Ifs but I dont think its too farfetched

[Todd]

I guess this means that Kimi really doesn't want to spend the rest of his career at McLaren.

[Amrl]

Heh Raikkonen must have been quite confident when signing that deal. I don't think there's any way Dennis will pay that kind of salary to anyone.

[CLX]

I'm impressed. But then, if he manages to defeat Schumacher this year, I think he'll be worth it.

[holiday]

Wasn't Ron that guy who tossed coins with Senna about his salary? Well, once a tosser, always a tosser.

[StickShift]

I wonder if the 50 million is from the team or from a sponsor.

[baddog]

it sounds a bit like the deal fisi had at benetton. if mclaren go down the chutes kimi is SO screwed as you can guarantee with such a package there is only a get out on one side

Shaun

[Ross Stonefeld]

2003 Mclaren budget 269.15m

Mercedes 145
West 50
Mobil 1 29
Siemens 13.5
Michelin 5.8
SAP 5
Hugo Boss 3.1




Wouldnt his 5th year be the first year they'd lose 50mil from West?

[Todd]

Originally posted by baddog
it sounds a bit like the deal fisi had at benetton. if mclaren go down the chutes kimi is SO screwed as you can guarantee with such a package there is only a get out on one side

Shaun

I think that if there is anything that can be counted on in contemporary F1, it is that McLaren-Mercedes will not go down the chutes. Sure, they may be 3rd in the WCC again, but that is hardly a Benetton or Jordan level of despair. Any other dominant team is likely to be a temporary one, and other than Williams of the '90s, by the time a driver gets into a team at its peak, the peak will probably be over. Why worry about leaving McLaren-Mercedes, which has longterm committed technical partners and the know how to stay near the top?

[baddog]

Originally posted by Todd


I think that if there is anything that can be counted on in contemporary F1, it is that McLaren-Mercedes will not go down the chutes. Sure, they may be 3rd in the WCC again, but that is hardly a Benetton or Jordan level of despair. Any other dominant team is likely to be a temporary one, and other than Williams of the '90s, by the time a driver gets into a team at its peak, the peak will probably be over. Why worry about leaving McLaren-Mercedes, which has longterm committed technical partners and the know how to stay near the top?

I agree, the fact it IS mclaren is the difference (though a lot of people were classing benetton as a bonafide top team when fisi signed)

Shaun

[Scudetto]

Originally posted by holiday
Wasn't Ron that guy who tossed coins with Senna about his salary? Well, once a tosser, always a tosser.

Ironic, no? Ron refused to pay Senna's asking price because he wanted to rather spend money on car development; but without a decent seat in a top team, Senna was compelled to stick around on a race-by-race basis.

But now Kimi gets $50 mil for a single season of driving. Apparently Ron's no longer concerned about the financing of McLaren's car development program. Where's that MP4-18 by the way?

[Paco]

NO WAY McLaren are willing to dish out 50M USD up front to a driver who hadn't won a race

The whole tobacco sponsorship issue aside as there's too much time still before it is invoked to believe the legislation won't be change or somehow "averted".

Considering the tough economic times ahead and the fact McLaren have overspent on their new facility. There's no way any driver outside of MS would be able to command such a salary. The only way would be if Kimi had a sponsor that was willing to outright pay his salary like BAT did for Villeneuve.

I can not for the life me believe McLaren would dish out that kind of figure for an "unproven" championship contender back when he first signed his contract. Sure he had signs of being a potential race winner but never anything more.

I think Alsonso/Webber have done much more then Kimi every has either at Sauber or now with McLaren.

If it comes out to be true - we now know why Ron is fighting it out with Eddie and Paul over a measily few million. He's hoping to invest the couple of million in a emerging biotech and hope he can cash out for 50M in a few years time!

This whole 50M for 1 year is just as out there as JV driving for Ferrari next season. Surely, in F1 anything could happen but come on; let's get serious

Someone probably forgot to read the fine print where is said: 50M over 5 years if McLaren take up there option on him.

If it is infact 50M in the 5th, bye bye Kimi and welcome aboard JV next year. RD will unload Kimi for one year. Renogiate his contract and have JV drive on a performace based contract.

JV wins
RD wins
Kimi - did you really believe you'd be able to make 50M a year????

Paco

[marion5drsn]

When you hear about baseball players in U.S.A. are being paid anything is possible! I don't believe it fully about Kimi but who knows for sure. They don't want the others to get him do they? Also we don't know just how the contract is written! M.L. Anderson

[Deeq]

Originally posted by Scudetto


Ironic, no? Ron refused to pay Senna's asking price because he wanted to rather spend money on car development; but without a decent seat in a top team, Senna was compelled to stick around on a race-by-race basis.

But now Kimi gets $50 mil for a single season of driving. Apparently Ron's no longer concerned about the financing of McLaren's car development program. Where's that MP4-18 by the way?

The think is though once the 4th year is over KR won't be Mc driver as I don't see Ron choosin to invoke the option.

See

A) Mc great(F2002ish) CAR why pay that sum if a Monkey can win you all
B) Mc not(MP4-17) great CAR WHY waste all than money on a driver who don't have any chance of a win(WDC) anyway develop it instead.

C) Mc something between like MP4-16. Hmm KR may say I want out if he don't by then have one/a WDC, and RON my allso feel that other drivers/FA could do as much ie get the occational win, and Pay them about $ 16m. anyway this is the only feesable alternative for RON to think even Paying
$ 50m.

But this seems Late april fools than genuin RON deal. :

PS if KIMI Puls off as writen here then all the best and congratulation

[holiday]

Originally posted by Scudetto
Ironic, no? Ron refused to pay Senna's asking price because he wanted to rather spend money on car development;

Yes. Actually Ron cut a deal there because he won the gamble while Senna lost 500.000 Dollar.

[hedges]

Well, a couple of things if the reports are accurate.

Total for 5 years, 70 mill, so thats 14 mill a year. Going by MS, Ralf, and JV thats what you pay for a top driver (Hakkinen must have been on silmilar with win bonuses).

By doing this Ron actually has an extra 12, then 10(22 accumulative - not including interest), then 8(30) then 6(36) mill in previous years than if he paid the contract evenly throughout those years. That has to be worth at least an extra 20 mill over those years (invested), that is a good deal for Ron, takes advantage of the extra capital in earlier years and gets a top driver in the meantime with little impact on his budget (the 50 mill will also be worth less in 5 years with inflation).

I agree Kimi is still unproven, but there is a severe shortage of WDCs with time left on the clock in F1, so it stands to reason the next best things would rise in value, at least for top teams.

In the end, effectively 10 mill a year or less for Ron and all that with the option to drop him before that 5th year if he doesn't deliver. This may work out well for KR but it isn't going to work out badly for Ron.

[Paco]

Also, why lock yourself in for such a long period of time.

Ron's probably looking at drivers like Alsonso and Webber and thinking to himself whether he has made the right move. Who else is lurking in the dark in the next year or two that may prove to be better than Kimi.

Think if Williams had dished out that kind of money for Juan only to have Juan spanked by Ralf a bit this season. (Don't get into a JPM vs RS thing going - I actually perfer Juan anyday!). If Ralphie does mount a serious go at the title this year in the next race or two and pulls it off. Juan's value will quickly start slipping.

Nothing like having 50M dollar man on the books only to have his team mate get the better of him.

The point is, until a driver has proven to be of championship calibre by stringing together race victories and a solid championship run. A team would be out of their minds to offer up a up and coming, the kind of package that is being discussed here without some significant performance and exit clauses.

To date, I believe only Jacques and Mika should have been offered contracts of that sort when there contracts came up for renewal. Notice: Both are champion drivers!

Whether Juan, Alsono, Webber and Kimi deserve that type of consideration in future contracts should only be based on results. Of the group, Kimi is the only IMO putting in the effort to be awarded it. Juan's qualifying and racing last season. Alsonso and Webber this season.

Even then, there's a combined 3 race wins for the entire group. Hardly anything to write home about and surely not 50M reasons!

[Nikolas Garth]

Originally posted by holiday


Yes. Actually Ron cut a deal there because he won the gamble while Senna lost 500.000 Dollar.

They were tossing for $1,000,000.

[holiday]

Originally posted by Nikolas Garth
They were tossing for $1,000,000.

made the tossing all the more worthwhile, didn't it

[zfh10]

Originally posted by hedges
Well, a couple of things if the reports are accurate.

Total for 5 years, 70 mill, so thats 14 mill a year. Going by MS, Ralf, and JV thats what you pay for a top driver (Hakkinen must have been on silmilar with win bonuses).

By doing this Ron actually has an extra 12, then 10(22 accumulative - not including interest), then 8(30) then 6(36) mill in previous years than if he paid the contract evenly throughout those years. That has to be worth at least an extra 20 mill over those years (invested), that is a good deal for Ron, takes advantage of the extra capital in earlier years and gets a top driver in the meantime with little impact on his budget (the 50 mill will also be worth less in 5 years with inflation).

I agree Kimi is still unproven, but there is a severe shortage of WDCs with time left on the clock in F1, so it stands to reason the next best things would rise in value, at least for top teams.

In the end, effectively 10 mill a year or less for Ron and all that with the option to drop him before that 5th year if he doesn't deliver. This may work out well for KR but it isn't going to work out badly for Ron.

Good post

[dgsg]

Originally posted by CLX
I'm impressed. But then, if he manages to defeat Schumacher this year, I think he'll be worth it.

Watch out for the flying pigs!
Dan

[CLX]

Originally posted by dgsg
Watch out for the flying pigs!
Dan

Ha ha.

[CrypticSoda]

That reminds me a lot of NFL contracts which are ridiculously backloaded. If you read a guy gets a 7 year 50 million dollar contract, almost all the money is in the final two years. But guess what, they will be cut, traded or the deal is renegotiated, and they almost never get the big payday.
The difference to F1 is, the contracts are not guaranteed. Well, it's not like they count for a lot in F1 either

But anyway, hedges lined it out perfectly already

[F1Johnny]

Originally posted by hedges
Well, a couple of things if the reports are accurate.

Total for 5 years, 70 mill, so thats 14 mill a year. Going by MS, Ralf, and JV thats what you pay for a top driver (Hakkinen must have been on silmilar with win bonuses).

By doing this Ron actually has an extra 12, then 10(22 accumulative - not including interest), then 8(30) then 6(36) mill in previous years than if he paid the contract evenly throughout those years. That has to be worth at least an extra 20 mill over those years (invested), that is a good deal for Ron, takes advantage of the extra capital in earlier years and gets a top driver in the meantime with little impact on his budget (the 50 mill will also be worth less in 5 years with inflation).

I agree Kimi is still unproven, but there is a severe shortage of WDCs with time left on the clock in F1, so it stands to reason the next best things would rise in value, at least for top teams.

In the end, effectively 10 mill a year or less for Ron and all that with the option to drop him before that 5th year if he doesn't deliver. This may work out well for KR but it isn't going to work out badly for Ron.

Good analysis. It's all about the time value of money. His return on Kimi in the early years through sponsors and PR work will be very high. It also appears that the option will be Ron's to keep him rather than Kimi simply receiving a $42mill pay rise in year 5.

[Arska]

I can't believe Kimi would accept this deal if Ron were totally free to decide on whether to retain him, or not. Ron would have all the motivation to dump this driver, no matter who he is.

If the fifth year had hundreds of pages of conditions, performance clauses etc., then it would sound somewhat possible.

[Nikolas Garth]

Originally posted by holiday



made the tossing all the more worthwhile, didn't it

Yes, Ron won.

[Nikolas Garth]

Originally posted by Jackman
BizF1 reported this in their first issue:

Kimi Raikkonen's five-year contract with McLaren Mercedes is $2m/$4m/$6m/$8m pay-packets in years one, two, three and four. But in year five there is a whopping obligation for Ron Dennis to pay him $50 million if he opts to keep him. US$50 million would place him right above Michael Schumacher and make him the highest paid driver in motor racing history.

I wonder if there are any Win Bonuses or other Performance oriented payments???

Otherwise Kimi would be getting in:

2002 - $2million
2003 - $4million
2004 - $6million
2005 - $8million
2006 – Booted out of McLaren

No way known will Ron pay $50million dollars in what may still be a market where driver’s salaries are under downward pressure.

[mr. handsome]

Originally posted by Paco

If it is infact 50M in the 5th, bye bye Kimi and welcome aboard JV next year.

And how old will the grandpa be in 2006?

[mr. handsome]

Originally posted by hedges
Well, a couple of things if the reports are accurate.

Total for 5 years, 70 mill, so thats 14 mill a year. Going by MS, Ralf, and JV thats what you pay for a top driver (Hakkinen must have been on silmilar with win bonuses).

By doing this Ron actually has an extra 12, then 10(22 accumulative - not including interest), then 8(30) then 6(36) mill in previous years than if he paid the contract evenly throughout those years. That has to be worth at least an extra 20 mill over those years (invested), that is a good deal for Ron, takes advantage of the extra capital in earlier years and gets a top driver in the meantime with little impact on his budget (the 50 mill will also be worth less in 5 years with inflation).

I agree Kimi is still unproven, but there is a severe shortage of WDCs with time left on the clock in F1, so it stands to reason the next best things would rise in value, at least for top teams.

In the end, effectively 10 mill a year or less for Ron and all that with the option to drop him before that 5th year if he doesn't deliver. This may work out well for KR but it isn't going to work out badly for Ron.

Hedges is seeing all this in a more accurate light.

[mikedeering]

Originally posted by Nikolas Garth
They were tossing for $1,000,000.

Not quite true - they were tossing for $500,000 a year. (Which to Ron's apparent delight Senna didn't recognize at the time). As it was a 3 year contract, that toss saved Ron $1.5m.

All of this was before 1993 (I think it was Senna's first McLaren contract running from 1988-1990). For 1993 Senna had his race-by-race deal for the first half of the year, obliging Ron to pass his hat around the sponsors every other week to make up the $1m.

The $50m for Kimi seems somewhat excessive, but equally getting Kimi for $4m this year seems something of a bargain. And Ron's tears in Malaysia this year obviously shows he has a soft spot for Kimi!

The 5 year contract is worth $70m in total if BizF1 numbers are correct - that's $14m a year, which seems pretty reasonable for an F1 team leader - Ralf is on $12m IIRC for example. Of course, Ron's problem will be year 6...

[HSJ]

Originally posted by Ross Stonefeld
From July 03 issue of Business F1's Power Rankings 2003. Top 150 people in F1. Which is a joke really since Raikkonen is listed as 11th However this caught my eye

$50M ??? No, I doubt it. Someone has pulled a joke on Business F1 or something.

[HSJ]

Originally posted by Ross Stonefeld
Can Mclaren-Mercedes afford him? Yes

Can they afford to lose him? No

True, but I still doubt it. Maybe they got confused between yearly salary and the contract salary over, say, 5 years?

[HSJ]

"Kimi Raikkonen's five-year contract with McLaren Mercedes is $2m/$4m/$6m/$8m pay-packets in years one, two, three and four. But in year five there is a whopping obligation for Ron Dennis to pay him $50 million if he opts to keep him. US$50 million would place him right above Michael Schumacher and make him the highest paid driver in motor racing history. "

I don't exactly believe that's true, but anyway

[HSJ]

Originally posted by holiday
Wasn't Ron that guy who tossed coins with Senna about his salary? Well, once a tosser, always a tosser.

[HSJ]

Originally posted by Todd


I think that if there is anything that can be counted on in contemporary F1, it is that McLaren-Mercedes will not go down the chutes. Sure, they may be 3rd in the WCC again, but that is hardly a Benetton or Jordan level of despair. Any other dominant team is likely to be a temporary one, and other than Williams of the '90s, by the time a driver gets into a team at its peak, the peak will probably be over. Why worry about leaving McLaren-Mercedes, which has longterm committed technical partners and the know how to stay near the top?

Todd

[HSJ]

Originally posted by Paco


I think Alsonso/Webber have done much more then Kimi every has either at Sauber or now with McLaren.

No comment needed. That line speaks for itself.

[Nikolas Garth]

Originally posted by mikedeering


Not quite true - they were tossing for $500,000 a year. (Which to Ron's apparent delight Senna didn't recognize at the time). As it was a 3 year contract, that toss saved Ron $1.5m.

Uncle Ronny when interviewed by Tim Sebastian on "HARD TALK" said they tossed for $1M. What's more he said the coin landed on the floor and went under a table or chair, and both he and Senna were on their hands and knees looking for the coin.

What a sight that must have been.

[Double Apex]

Originally posted by holiday
Wasn't Ron that guy who tossed coins with Senna about his salary? Well, once a tosser, always a tosser.

I guess he lost this time, serves him right

Oh and Nikolas, I believe mikedeering is right about the 1,5 m. That's also what I heard Ron say in an interview.

[kismet]

I wonder if they've told Kimi that he apparently has a 5-year contract with McLaren. He seems to be under the impression that he's only contracted to the end of 2004, with 2005 as an option.

[mr. handsome]

Originally posted by kismet
I wonder if they've told Kimi that he apparently has a 5-year contract with McLaren. He seems to be under the impression that he's only contracted to the end of 2004, with 2005 as an option.

I understand from Jackman's quote that there in fact is an option for the fifth year:

Quoted by JackmanKimi Raikkonen's five-year contract with McLaren Mercedes is $2m/$4m/$6m/$8m pay-packets in years one, two, three and four. But in year five there is a whopping obligation for Ron Dennis to pay him $50 million if he opts to keep him. US$50 million would place him right above Michael Schumacher and make him the highest paid driver in motor racing history.