In a new campaign in 1.5.1, I was able to create a mercenary contract as Cao Cao. Strangely, Cao Cao is the mercenary for Yan Baihu, with the target being Dong Zhuo (with whom Cao Cao is at war but Yan Baihu is not). In other words, Yan Baihu will pay Cao Cao for Cao Cao to fight Cao Cao's existing enemy.
Once this mercenary contract is issued, the mercenary contract bar at the top reads:
Is this a known bug?