Hamilton to be replaced by Perez

Lewis Hamilton will end his 14-year association with McLaren at the end of the season and join Mercedes.

Press Association Sport understands Hamilton is to sign a three-year deal with the German manufacturing giant, worth a reported £15m (€18.8m) a year.

Although McLaren team principal Martin Whitmarsh admitted just three weeks ago there was “no plan B” should Hamilton quit, Sauber’s Sergio Perez is to replace the 27-year-old at the Woking-based marque.

The big question now, which has still to be answered, surrounds the future of seven-times champion Michael Schumacher.

Hamilton will partner close friend Nico Rosberg at Mercedes, leaving Schumacher out in the cold, but with the prospect of staying on as a brand ambassador for the team.

With Hamilton’s move sparking a domino effect there is a possibility 43-year-old Schumacher could yet join another team, but it is likely he will retire for a second time.

As for Hamilton, it is now clear he is to cut his ties with McLaren.

Hamilton has spent the last few weeks agonising over the decision, having signed for the team at the age of 13.

Mercedes entered into talks with McLaren’s management company XIX Entertainment several weeks ago.

Their offer was significant, not only in terms of money, but vitally allowing Hamilton greater freedom with regard to his image rights and less impact on his personal time from sponsorship appearances.

By contrast, McLaren’s opening gambit was to cut Hamilton’s salary by a third given the current economic climate, which was hardly an ideal starting point.

As a storm gathered around Hamilton at the Italian Grand Prix, a race he won from pole, it appeared then he was on his way.

However, McLaren countered Mercedes with an improved contract offer of £2million per year, which is understood to have swayed Hamilton, especially given the team’s form at the time.

In Singapore at the weekend Whitmarsh and Hamilton both appeared more relaxed, and the signs were then Hamilton would stay, with one source confirming a deal was “85-90 per cent” done.

Even F1 supremo Bernie Ecclestone conceded at the weekend Hamilton was in two minds because according to the 81-year-old “he was definitely on his way, no matter what”.

Despite the financial inducements being offered by Mercedes, Hamilton must also believe in the vision being offered to him by team boss Ross Brawn.

Since winning world titles with the Brawn GP team in 2009, and with Hamilton’s current McLaren team-mate Jenson Button at the wheel, Brawn has slowly built up Mercedes over the past few years.

Mercedes have only won one of 52 races since Mercedes took over Brawn GP at the end of the 2009, but the core of people behind the scenes is second to none.

Importantly, with new engine regulations due to come into force in 2014 as F1 switches to a new turbo era, Mercedes should have an advantage as a manufacturer and with McLaren as a customer.

Without doubt Hamilton’s move is a gamble, especially given his long-stated ambition to win multiple world titles.

But with only one in five years at McLaren – likely to be six – and that back in 2008, he must now feel a change is required.

For McLaren, losing their big-name star will hurt, but in Perez they are recruiting a potential future world champion.

The 22-year-old, still a member of Ferrari’s young driver academy, also brings with him considerable financial backing from Mexico, notably telecommunications giant Telmex which is run by one of the world’s richest men in Carlos Slim.