Ferrari is offering Michael Schumacher a R254-million-per-season deal to extend his tenure at the Scuderia beyond 2004.

Ferrari is offering Michael Schumacher a R254-million-per-season deal to extend his tenure at the Scuderia beyond 2004.

The 34-year old five-times world champion earns about R318 million a year on his current deal, which expires at the end of next year. The German, who has been a Ferrari driver since 1996, is taking a break from testing following Sunday's Australian Grand Prix, to think about the offer.

According to , Schumacher’s manager, Willi Weber, told German daily newspaper : "I have received an offer from Ferrari that will go beyond 2004. Michael will let me know when he is ready to talk about it."

Ferrari is understood to be offering less money that what the German is currently earning because the driver market is in decline… Top earners such as Eddie Irvine have been forced out of the category, and younger drivers, who will accept lower salaries, have taken their place.

Schumacher's other options to extend his F1 career beyond 2004 would include McLaren-Mercedes, Toyota and Williams-BMW, but he has often voiced his contentment with the Scuderia.

And if Australian Grand Prix winner David Coulthard is to be believed, Schumacher would be smart to stick with Ferrari. The Scot is under no illusions that Ferrari will remain the strongest force in F1 for the foreseeable future.

Coulthard, who took full advantage of his rivals’ errors to win in Melbourne, told Scottish newspaper that he fears a red backlash in Malaysia in a fortnight's time.

"I'm extremely pleased to have started the season with a victory, but people who are writing off Ferrari are making a big mistake," the Scot said. "They are going to come out for the next race more fired up and if you thought Sunday was action-packed, I have a feeling Malaysia will be even better.”