Will all 10 F1 teams sign on the line and race on into 2021?

As detailed previously, Formula 1’s current commercial agreements with its teams – termed the “Concorde Agreement” despite the discord caused by the document’s inequitable financial and governance provisions – expire on 31 December 2020.

A draft replacement for the deal under which F1’s 10 competitors are committed to the championship was circulated early this year. Teams were poised to sign up, with minor clarifications, when Covid-19 hit the world and F1.

Final negotiations were placed on the back burner while F1 concentrated on minimising the effects of the pandemic. But signing up all 10 teams for 2021-25 is now back on top of Liberty Media’s off-track to-do list.

A number of teams, including Ferrari and McLaren, have indicated they are willing to sign the latest draft in order to provide much-needed stability. “The new Concorde Agreement complements the financial, technical and sporting regulations and secures a strong basis for the sustainability, growth and success of Formula 1 and all its stakeholders,” said McLaren Racing CEO Zak Brown recently.

“Liberty Media, F1 and the FIA, together with the teams, have worked diligently to protect the sport through the Covid-19 crisis, our return to racing and into the long term. McLaren Racing is fully committed to Formula 1 and we are ready to sign this new agreement imminently.”

Ferrari was previously the biggest objector as it potentially has the most to lose of all teams on account of its special benefits – the team last year received $110 million in non-performance bonuses, which will be substantially reduced under the new agreement. But team principal Mattia Binotto told RaceFans from Hungary the Italian team is willing to commit for the next five years.

“With the Concorde Agreement, where we are today, it is the output of long discussions between the teams and certainly with the F1,” he said. “As far as Ferrari, we are ready to sign.”

“We would like to sign it a given time even quite soon. I think that’s important for the future, for clarity, so we can all know where we are, and I think it’s important also for the small teams as its part of the entire package.

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“So looking ahead with clarity is important, so we are ready to sign. We are happy because F1 has understood the importance of Ferrari within F1, and we are satisfied with that.”

A number of others are also prepared to commit, including Renault and Racing Point, both of whom were demonstrably marginalised under the old agreement.

“It’s a step forward for the sport, certainly the sport looking forward from ’21 and especially from ’22 with the introduction of the cost cap, fairer price fund distribution, it’s going in the right direction,” said Marcin Budkowski, executive director of Renault F1. “It’s certainly things that we are supporting right now. A fairer, more sustainable Formula 1. So really, it’s looking positive from our side as well.”

Also in the FIA press conference was Otmar Szafnauer, CEO of Racing Point, who expressed broadly similar sentiments: “This was a logical incrementalism to get to, to this point. I think a lot of work has been has gone into it and I don’t think we’re that far off having something that we can all sign. But there’s still a few talking points, which I think will happen in the short term.”

However, a variety of F1 and (rival) team sources have told RaceFans Mercedes is pushing back on committing. It is said to be pushing for an extension of the current deal by a year rather than run the risk of racing into 2021 without an agreement. F1 CEO Chase Carey and Ross Brawn, who is charged by Liberty with managing the sporting aspects of F1, have indicated this remains a distinct possibility unless the teams agree.

“We can go racing [without agreements] and we can implement commercial payments in good faith so teams aren’t deprived, as it were,” Brawn told RaceFans in an exclusive interview in June. “But it’s our intent to get all this sewn up before we go into next year.”

A Mercedes spokesperson stated that the team “does not want to start live commenting [about] confidential negotiations” (the same stance it has taken with respect to Lewis Hamilton and Valtteri Bottas’s contract talks). By implication, then, Mercedes is not (yet) fully committed to signing as, logically, there is no reason to continue indulging in ‘live’ negotiations is all is agreed.

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Rival team bosses are said to be livid, as they believe F1’s dominant team aims to continue its hegemony of the past six years at their expense. Under the new agreement, Mercedes F1 stands to lose both a large part of its $80m annual bonuses and its privileged position on F1’s Strategy Group under the draft agreement – just as its parent company is laying off up to 15,000 workers and is close to shuttering or selling off an assembly plant in France.

Given that 2021’s financial regulations reduce direct racing budgets to $145m, by successfully pushing for a delay Mercedes would benefit from continued bonuses combined with substantially reduced costs. A double whammy, so to speak, but one Ferrari and – to a lesser degree as it receives less in bonuses – McLaren seem prepared to forego in the interests of stability for F1.

Clearly Liberty, as a listed company at the whim of shareholders, would prefer a united front for the sport – preferably with a signing ceremony photo opportunity to make the point to the markets – and is thus making every attempt at having full agreement in place for 2021.

“We are working closely with all the teams and making good progress on the future agreement,” an F1 spokesperson told RaceFans on Friday.

However, it is not inconceivable that nine of ten teams commit, leaving Mercedes as an outlier. This would not be unprecedented: In 2013 former F1 CEO Bernie Ecclestone initially did not offer terms to (now-defunct) Marussia and for almost a year the team did not qualify for revenues despite being entered in the championship.

Crucially, complying with the FIA’s entry requirements and fulfilling F1 commercial terms are two vastly different issues in terms of the EU Commission’s decree that F1’s administrative powers and commercial functions be separated. If they chime, so much the better, but teams can compete without commercial agreements being in place.

Ultimately each team faces three choices: accept the commercial terms on offer, reject them but race without an agreement in place and thus no guarantees of any shares of the sport’s revenues and, finally, to exit the sport. The choice is theirs.

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