Ferrari have begun talks with Michael Schumacher over extending his contract beyond the end of next season.

Schumacher's current deal runs out at the end of 2004, and the Italian team are believed to have put a £20million-a-year deal on the table.

The five-time world champion is understood to be raking in £25m per season on his current contract, and had talked about retiring after next year.

But the worry is that another team might tempt Ferrari's golden boy, with McLaren, Williams and Toyota all ready to break the bank in order to have F1's most successful driver behind the wheel of their cars.

So Ferrari, who snapped up Schumacher from Benetton in 1996, are now looking to keep hold of the 34-year-old for as long as they can.

His manager Willi Weber told German daily Die Welt: "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."