One of the most bandied-about terms in Formula 1 is ‘Concorde Agreement’, the covenant that has governed the commercial and regulatory aspects of the sport since the early eighties.
The term ‘Concorde’ was chosen as it can be applied in French and English, and refers to “a state in which people or things agree with each other and exist together in a peaceful way” – although it is spelt without the ‘e’ in the English language.
The original agreement was signed on 19th January 1981 in the FIA offices overlooking the place de la Concorde in Paris (where high-ranking individuals were publicly executed during the French Revolution) by a bunch of (mainly) British team owners and officials representing motorsport’s French-based governing body.
The reference to the historical square is particularly apt given that the signatories have seldom been in agreement or acted peacefully towards each other. Indeed, on numerous occasions it has seemed quite the opposite. Bitter wrangles have preceded the signing of previous Concordes.
Two editions of the agreement – covering the 1981-87 and 1988-1997 periods – were signed between the teams and FISA. The 1998-2007 (extended to 2009) and 2010-12 versions were tripartite documents, signed between the teams, FIA and F1’s commercial rights holder (CRH), namely Bernie Ecclestone’s family trust in the case of the former agreement and CVC Capital Partners thereafter.
The final agreement under CVC – the current 2013-2020 version – does not strictly qualify for ‘Concorde’ status although the term remains in wide use out of a combination of tradition and/or ignorance. Uniquely, it was not a collective agreement, but rather a series of individually-tailored bilateral agreements between each team and the CRH. An overarching Concorde Implementation Agreement was then entered into between CRH and FIA.
The successive agreements set out the commercial and regulatory obligations and commitments of the teams, CRH and FIA as the case may be. Put simply, the Concorde Agreements detailed how much money each teams would receive provided it fulfilled certain conditions, and spelt out the regulatory process to be followed throughout the period of validity.
The current agreements – made up of 11 documents, namely 10 bilaterals and the CIA – expire at the end of the year, and the plan was to sort the renewal process by 30 June.
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This, as so many things, has been disrupted by the pandemic. In a smart move, the FIA effectively eliminated the regulatory clauses by triggering terms in its International Sporting Code – which outlines regulatory processes to be followed unless overruled by a valid agreement – enabling it to impose the full 2021-onwards rules package by claiming that the new regulations fell outside the scope of the bilateral agreements. Tellingly, this was not contested by the teams.
The upshot of this is that the 2021-onwards agreement needs only to outline the revenue distribution structure and the process to be followed should major amendments be made to the regulations during the validity of the agreement. This in turn means no Concorde Agreement – by whatever name – is required to go racing in 2021: the technical, sporting and financial regulations were published as per the ISC.
Pedants will, of course, point out that the 2021 regulations have been postponed by 12 months due to the havoc wreaked by Covid-19 and the (albeit modified) existent regulations retained for another year, but this makes no difference to the overall thrust of the matter: Until overruled by superior agreement, the ISC holds sway, and any regulation changes for 2021-onwards are imposed as per its provisions.
The potential absence of any commercial agreement does, though, mean that no formal revenue structure is in place. British readers may see similarities with the country’s ongoing departure from the European Union, and the potential scenarios of ‘soft’ or ‘hard’ Brexits. The latter is in nobody’s best interests, but remains the only course forward after 31 December 2020 unless a delay is agreed or a ‘superior’ agreement cut.
Having previously said that Concorde negotiations were progressing as per schedule, F1 CEO and chairman Chase Carey told a Liberty Media investor call in early May that the final stages of the agreement were under discussion when Covid-19 “turned everything on its head”.
“We’ve decided to put [talks] on the back burner for the short-term, and prioritise addressing issues relating to 2020 first,” he explained.
“As we move forward with the 2020 calendar and finalise regulatory changes with the teams, we will once again return to completing the Concorde Agreement in the future.”
With the initial eight-race calendar announced and regulatory changes in place – mainly postponement of the original 2021 package plus reduction in budget cap levels from $175m to $145m – attention should now turn to completing the Concorde Agreement process.
However, in the same breath Carey suggested: “Nothing needs to be extended. We can essentially implement [what we like] and say [to the teams] ‘if you’re racing, that’s the terms on which you’re racing”, adding, “Obviously we’re looking to conclude [the agreement] with the teams.”
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The foregoing begs the following three important questions: Will the FIA be a direct party to a regulatory and commercial agreement, by whatever name? What are that chances that any post-2021 agreement is delayed? And could F1 race into the future without any form of agreement, save one imposed upon the teams by Liberty Media, current owner of F1’s commercial rights?
Speaking exclusively to RaceFans last month, FIA president Jean Todt made clear that the governing body was not a direct party to the current bilateral agreements. “We did not sign the agreement at the last renewal, it’s only the [CIA] between F1 and the FIA [that we signed],” he said.
“We don’t have any agreement with the teams. The agreement of the teams is with FOM, and as you have seen we are now under no specific governance [as to the process required] to implement the regulations after 2020. We also made one emergency article in our statues, the ISC, in order to be able to adapt new rules with 60% majority.”
The latter refers to the so-called ‘Covid-19 Clause’ inserted into the ISC, which requires a 60% majority rather than the previous unanimity for short-term rule changes, while longer term changes could be introduced without the need to consult the teams.
At the time the FIA bulletin stated: “The safeguard clause will overcome the current requirement to obtain unanimous agreement of all competitors to amend regulations within an individual FIA championship, cup, etc… allowing the FIA, under exceptional circumstances, to modify regulations with a shorter notice period and with the agreement of the majority of the competitors properly entered for the FIA championship, cup, etc.”
Indeed, the recent vote in favour budget cap reductions was accepted due to the 60% rule, without which it is unlikely to have been carried as merely dissent from a single team could have blocked the vote. Although approved “unanimously” according to the FIA, the word is that although there was initial objection once teams realised that the 60% threshold would be achieved they fell in line rather being conspicuous outliers.
The FIA’s position is therefore clear: The governing body could continue as it has in the recent past and not be party to a commercial agreement between F1 and the teams, and rely on ISC clauses to govern F1’s regulatory process, deviating only where it is in the sport’s best interests. Bear in mind that the ISC provides the FIA with total amendment powers in the case of safety-related matters.
Sure, the FIA strives to gain agreement from teams, but if none is forthcoming the ISC provides a backstop if needed. The FIA as regulator is in any event precluded by the EU Commission from involving itself in commercial matters as part of the EU’s blessing of the sale of F1’s commercial rights.
Is there not, however, a danger that teams could choose to leave F1 if no commercial agreements are in place? After all, who would race in what is a frighteningly expensive championship unless guaranteed an equitable slice of the sport’s riches?
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“It’s not a question of the Concorde Agreement [being] signed or not which would make the teams leave or stay,” argues Todt. “These are two completely different, separate things.
“We know that there is the risk, there is a risk that teams may decide to go. That’s why we are trying to make the best package in order to keep the small and to keep the big, and the medium. It is not an easy exercise.”
Saliently, unlike previous Concordes, the current draft agreement no longer demands a long-term commitment from teams to qualify for a share of revenues – as outlined previously notice is required by 31 March to exit in December of the same year.
All well and good, but could F1 find itself Concorde-less? We asked F1’s managing director for motorsport, Ross Brawn, in an exclusive interview.
“Concorde is now imminent,” he explained a fortnight ago. “It’s being discussed internally right now and our legal team didn’t waste time. They’ve been able to work through all the agreements in the meantime. So we’ll be re-engaging with the teams imminently to start that ball going again.”
Asked whether any agreement would be a bilateral (teams and F1) or tripartite (with the addition of the FIA), Brawn said, “I think because of things like governance and so on it will be a tripartite agreement.
“You can’t have a governance system that doesn’t involve the FIA. But I think the last agreement was a bit of a mix, really. It has elements that [involved] all three parties and elements that were just two [parties].
“So it could well be the same, that there’ll be commercial agreements between the teams which the FIA are not be involved in. But certainly if you look at governance and stability and regulations going forward, I think that has to be tripartite.”
Bear in mind that ‘F1’s legal team didn’t waste time’, that allegedly all the ‘main elements have been agreed’, yet the crucial question of a bipartite or tripartite agreement still remains unclear.
Now the billion dollar question, literally: Could F1 actually find itself without a commercial agreement of whatever sorts come 2021?
“It has in the past,” acknowledges Brawn, quickly adding, “It’s not our plan.”
“Of course we don’t know what the next six months will hold. As you say, we can go racing [without agreements] and we can implement commercial payments in good faith so teams aren’t deprived, as it were. But it’s our intent to get all this sewn up before we go into next year.”
With “past” Brawn is clearly referencing 2007 when F1 – under CVC, and as precursor to the formation of the Formula One Teams Association (FOTA) and its infamous breakaway threat – ran the season without an agreement after expiry. The prevailing agreement was extended on similar terms by mutual consent, but that seems unlikely this time around given vast discrepancies in revenues between major and independent teams.
Ferrari team boss Mattia Binotto is confident a deal will be struck, along similar lines to current bilaterals: “I think that now that the most important [calendar and regulation] decisions have been taken, I think the right time really to come to the conclusion of the Concorde Agreement,” he told RaceFans.
“I think that if we can do that very soon, at least we start the season [in early July] having all discussions concluded and focussing on the sports.”
Binotto believes the most likely format will be a “Commercial agreement in which the technical and sporting regulations are included in annexes”, adding, “The format of the regulations has been done for the governance. I think with the Concorde we are simply coming to the commercial agreements.”
Again the billion buck question: Could F1 go into 2021 without any form of commercial agreement, i.e. could F1 race without financial security, either in the short or long term?
At the end of the grid, we asked Claire Williams of the eponymous team whether a lack of clarity over a future agreement complicated their search for an investor.
“With regards to Concorde not having been signed, we were at a good point prior to the start of the season with that,” she explained, “but obviously with the Coronavirus pandemic coming into play, that put a pause on proceedings as we tried to make sure and put the sport on a positive footing.
“But that doesn’t mean that that situation around Concorde and picking that back up isn’t going to happen soon. And I believe that it will.”
Based on our discussions with the FIA, F1’s commercial rights holder and teams at both ends of the current performance spectrum, it seems F1 will race into 2021 with a commercial agreement between the teams collectively and the CRH outlining the commercial terms.
Annexes outlining the governance process (based on the ISC, but with variations to suit F1) and appendices stipulating the sporting, technical and (all-important) financial regulations will then be attached to what will be a bipartite agreement as opposed to a series of bilaterals as per current practice.
The challenge for F1 then is to sort all applicable fine print and structures within the next six months, which will not be easy given that clarity is still required as to the exact structure and format of what will still be known as a Concorde Agreement despite it being unlike any other than has gone before.
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