Some ideas for balancing the mercs-
Give them a reverse-Fear. They'll always attack with over 50% odds, the worse the odds the more likely they'll refuse. Gold is useless if no one is left to spend it.
And
Give them very high defensive withdrawal. And set it to trigger at 40% health rather than just before they die. They won't fight to the death for you.
Makes them less useful as cannon fodder.
Make them a bit stronger, and much more expensive. They'll deal with the hordes maurauding through your lands but you'll mortgage your kingdom to do it.
Make a "We fear for our security!" unhappiness penalty that grows depending on how much of your army is merc.
Make them cost money to promote. They're well-known, they have other bidders now. If you want to keep them you're going to pay