New Deal For F1

New Deal For F1

Life is quiet on the Belgian front this weekend as the grand prix teams prepare for life on the same team.

They are united, and Renault even drops its appeal against Racing Point, after the signing of the newest edition of the Concorde Agreement.

The commercial contract that binds everyone in Formula One, known simply as ’The Concorde’, has finally been renewed until the end of 2025.

The FIA, Formula 1 management and the 10 grand prix teams have all signed the new five-year agreement that runs from the start of 2021.

It follows on from the previous agreements, known as the Bilateral Agreements, that have been in place since early in 2012. These were individual deals with each team but all of them based on the original Concorde Agreement.

The first Concorde was agreed at the end of the so-called FISA-FOCA War in March 1981, after a lengthy fight for the control of the commercial rights of F1 between the international automobile federation (FIA) and the team owners.

The result was a deal that saw the teams taking control of the commercial rights, but not owning them and sharing the profits between the various parties.

The second five-year Concorde, which ran between 1987 and 1992, saw Bernie Ecclestone, as the leader of the teams, set up his own independent company – Formula One Promotions and Administration – and begin to sell rights on behalf of the teams.

Things ran smoothly until it became clear that Ecclestone was making enormous amounts of money. This meant that the negotiating the Concorde Agreement for the years 1997-2001 was a messy affair but the teams were eventually bludgeoned into accepting the terms and since then each deal has seen a shift of percentages towards the teams and away from the commercial rights holder.

The FIA agreed a deal in 2002 for a one-off payment to lease the rights to Ecclestone’s Formula One group from 2011 to 2110 and today is involved only as the regulator, being paid an annual fee by Formula One. Ecclestone sold the Formula One business to Liberty Media early in 2017, and the sport has been run by Liberty since then with Chase Carey (left) as chairman and CEO, his primary focus being to negotiate a new healthier deal, which removed huge advantages that Ecclestone had agreed to pay the big teams, in order to keep them happy.

Carey has adopted a very different style to negotiations and has tried to move F1 away from Ecclestone’s confrontational methods that were previously the norm. The signing of the new agreements, with minimal fuss, is a tribute to Carey’s abilities.

The new deal, coupled with the new regulations, announced in October 2019 that come into force in 2022, will reduce the financial and on track disparities between the teams, helping to level the playing field, which it is hoped will create closer racing and thus attract more fans, which will in turn generate more revenues and strengthen all the companies involved.

“This year has been unprecedented for the world and we are proud that Formula 1 has come together in recent months to return to racing in a safe way,” said Carey. “We said earlier in the year that due to the fluid nature of the pandemic, the Concorde Agreement would take additional time to agree and we are pleased that by August we have been able achieve agreement from all 10 teams on the plans for the long term future of our sport. All our fans want to see closer racing, wheel to wheel action and every team having a chance to get on the podium. The new Concorde Agreement, in conjunction with the regulations for 2022, will put in place the foundations to make this a reality and create an environment that is both financially fairer and closes the gaps between teams on the race track.”

The deal has been welcomed by the FIA President Jean Todt.

“The conclusion of the new Concorde Agreement between the FIA, Formula 1 and all 10 of the current teams assures a stable future for the FIA Formula One World Championship,” he said. “Over its 70-year history, Formula 1 has developed at a remarkable rate, pushing the boundaries of safety, technology and competition to the absolute limits, and today confirms that an exciting new chapter in that history is about to begin. During the unprecedented global challenges currently facing everyone around the world, I am proud of the way that all of Formula 1’s stakeholders have worked together over the past months for the best interests of the sport and the fans to agree the pathway for more sustainable, fair and exciting competition at the pinnacle of motor sport.”

Ferrari continues to have a privileged position in the sport as the longest standing team. It will soon celebrated its 1,000th Grand Prix at the 1,027th World Championship race, which will be held at Mugello on September 13. This status means that the team enjoys both political and financial advantages, although these terms have been reduced.

“It is an important step to ensure the stability and growth of the sport,” said Ferrari CEO Louis Camilleri. “We are very confident that the collaboration with the FIA and Liberty Media can make Formula 1 even more attractive and spectacular, while preserving its status as the ultimate technological challenge. Racing is in Ferrari’s DNA and it is no coincidence that the Scuderia is the only team that has participated in every edition of the FIA Formula One World Championship, becoming an integral and essential part of its success, today as in the past and, above all, in the future.”

Carey alluded to the new deal with Ferrari in his comments.

“In the path that has led to defining the new Concorde Agreement, we have been able to appreciate Ferrari’s constructive role, always aimed at making the pinnacle of motorsport stronger, fairer and more sustainable,” he said.

The terms of the agreement remain confidential but the majority of the document, aside from the financial schedules, remains unchanged from the tried and trusted Concorde Agreement that has been the structure of the sport for 40 years.