Did Mercedes get a special deal from Liberty on F1’s Concorde Agreement?

2020 F1 season

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The most fundamental document in Formula 1 – namely the Concorde Agreement – is also the sport’s most misunderstood, predominantly on account of its confidentiality. It is this secrecy that enables parties to selectively bandy about inferences as to their positions without fear of contradiction unless any of the other parties breaches the agreement.

During the final stages leading up to the signing of the agreement by all teams, there were suggestions from Mercedes Motorsport CEO Toto Wolff that compromises had been made, in turn leading the current champions to sign the 2021-2025 agreement.

“Obviously I would have wished for a better situation for Mercedes, but it is what it is,” Wolff said during the Belgian Grand Prix weekend, having a fortnight previously reiterated that Mercedes was not ready to sign up to the incoming agreement.

“In the final part of the negotiations we agreed on some compromises that found their way into the agreement, and you know, it’s [the same] with every negotiation: at the end of the day, if both [parties] stand up at the table and are not quite satisfied, it’s probably a good outcome.”

Wolff’s comment took a number of parties by surprise, not least commercial rights holder Liberty Media, which had consistently stated that there would be no negotiations and that effectively what had been presented as draft last November was, save for a few legal clarifications, the final document.

Toto Wolff, Mercedes, Silverstone, 2020
Wolff wanted more concessions from Liberty Media
“There were no side negotiations,” a Liberty insider told RaceFans, adding that [Liberty CEO Chase Carey] has consistently been clear on that point. Another Liberty source said that “The only compromise was that Mercedes had compromised by agreeing to sign without compromise.”

This was underscored by Christian Horner, who in an exclusive interview last week stated, “We just didn’t negotiate, because [Liberty CEO Chase Carey] wouldn’t move. What he put on the table was pretty much what was signed last week; [only] some subtleties have changed.” For that, read ‘legal jargon’.

In fact, the Red Bull Racing boss, a veteran of two previous Concorde signings, had previously stated this round of discussions was “a lot less fun” as there had been no horse trading as has invariably been the case under former F1 tsar Bernie Ecclestone.

Wolff’s comments, though, led to suggestions in the media that Mercedes managed to obtain special terms, particularly after he previously stated Mercedes was “the biggest victim” and the team was not being [fiscally] recognised for its contributions to F1, as was Ferrari under all recent agreements.

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In the 2021-2025 edition of the Concorde Agreement, Ferrari skims a minimum of 5% off the top of the prize fund before the remainder is split between all competitors based on their current and historic performances. The new Ferrari bonus amounts to around 50% of its current value, F1’s annual revenues being equal.

Had Mercedes been offered better financial terms as inducement to sign, or maybe negotiated similar ‘protection rights’ to those awarded to Ferrari by way of its veto? Could there have been a side deal between Liberty and Mercedes?

According to various team principals this could not be the case given that the agreement is not only totally transparent but standard across all teams and the commercial rights holder is forbidden from entering into secret deals. Ferrari’s veto and bonus are clearly stated – the former in the governance portion of the agreement and the latter in the commercial section.

Chase Carey, Spa-Francorchamps, 2020
Carey yielded no ground, said Christian Horner
Indeed, according to Horner, “fundamentally all teams are treated equally amongst each other with the exception of one.” No prizes for guessing who the “exception” is.

“Ferrari are our longest standing team, there has been a long historic recognition of it, so there’s still a recognition of it in some rights,” said Carey in reference to the veto and bonus after all 10 teams had signed up.

“I think we’ve addressed those, made them more targeted, made them more manageable as part of the governance structure. But yes, we continue to recognise Ferrari’s unique role in the sport.” Note: Not a word from Carey about the role of Mercedes in F1.

The incoming agreement contains annual break clauses, which must be invoked before March 31st, which permit teams to exit F1 at the end of that particular season. Although not directly confirmed, Horner conceded that “the parent company guarantees that previously had to be provided” were no longer required.

Thus, teams may leave F1 without penalty provided the clause is triggered by the due date. Maybe that is why Mercedes signed up?

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2020 F1 season

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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  • 23 comments on “Did Mercedes get a special deal from Liberty on F1’s Concorde Agreement?”

    1. In the 2021-2025 edition of the Concorde Agreement, Ferrari skims a minimum of 5% off the top of the prize fund before the remainder is split between all competitors based on their current and historic performances.

      A 5% minimum suggests Ferrari might get more than that? So what influences that minimum and what is the maximum likely to be? While I disagree with Ferrari getting any special bonus, the reality is they do get one, and it may take a quite a few Concorde Agreements to whittle the bonus paid to Ferrari down to 0.

      1. It was 5% before the 2013-20 Concorde, that went up to +-10% with the various constructor champion bonuses, and is now again 5%. It depends on the size of the ‘pot’ – obviously 5% of 1billion is less than 5% of 2billion. Also, there are incremental %ages for prize pots of more than 1bn. But the important thing is that in terms of the budget cap even if Ferrari received 10% or even 20% in bonuses it can’t spend them on performance.

        1. @dieterrencken Thank you for clarifying that, and thanks for reminding me about the expectation the money won’t be spent on performance.

    2. The incoming agreement contains annual break clauses, which must be invoked before March 31st, which permit teams to exit F1 at the end of that particular season.

      I haven’t paying attention on this. This must be the weakest Concorde Agreements ever, right? Why did commercial holder risked losing any team during five years agreement like this? It’s only put pressure and adding business uncertainty.

      1. I’ve written this since last year May – but you’re not the only one who missed it…as a nosey around others will show. Why did Liberty include the clause? Because some teams may not have signed up to Concorde in the first place.

        1. So Haas could still walk away if the team does not perform.

        2. Wouldn’t surprise me if we are down to 8 teams by 2025

        3. The likelihood of a team being shut down instead of being sold is extremely slim.

          However, with a $140m budget cap, & a big portion of that already guaranteed by F1 as a share of team participation (I’m hoping the new team revenue share restrictions are no longer in place?), it will be much easier for existing race teams to step up into any gaps using the Haas / Tracing Point model.
          F2 & F3 entries were oversubscribed, & there are some big teams in sportscar racing. HWA immediately springs to mind.
          It’s been a long time since we’re had a team progression option up the formula racing ladder, but I suspect it must have been considered.

      2. I think they feel confident that the deal on offer will still be a better cost/reward balance than any other form of motorsports or sponsorship @ruliemaulana.

        And also, keeping a company tied against its will won’t do much good anyway. They would just try to hang on with minimum investment, pretty much comparable to what happens when a driver (or athlete, or singer, actor etc) is held to a contract when they wanted to leave.

        1. @bascb Casey as any other commercial entity leader should not give up too much power he could not control. If teams decided to leave on 2nd year it would collapse the whole business.

          No manufacturers had capabilities to catch up engine development two years behind. He can’t sale Liberty because there’s no more F1. And still have remaining years of big contract obligation to media and others.

          1. Not too sure what you are arguing there @ruliemaulana. It is clear that F1 cannot run withiout having enough teams, and enough engine manufacturers to make up a decent grid.

            On the other hand, I think that the team at Liberty is pretty confident that what F1 offers a team/team owner for the next few years is convincing enough that the grid will be full even if an onwer leaves – they would likely sell the team to a new buyer, like Williams just did. Otherwise they would not have included this option.

    3. Toto is just trying to save face with these comments. I think he was told to sign it by the bossman and to stop behaving like an entitled child!

      1. I think there might be at least a bit of truth to that if not more.

        1. Yes, the story is whatever you want it to be.

      2. Toto is not behaving that way.
        And no, you are still wrong.

        1. NO! Dieter is without doubt THE moral authority on all things F1! Just ask Toto 😀
          It’s very clear from recent interviews that there is an undercurrent of discourse between Dieter & Toto (That may or may not extend to Mercedes as well) so I’d take Dieters comments with a brief sprinkle of salt on this matter.

    4. Thus, teams may leave F1 without penalty provided the clause is triggered by the due date. Maybe that is why Mercedes signed up?

      Exactly. I hope this is all their plan.
      To shoe The Finger to all those “geniuses” ruining F1

    5. What if we swap “Mercedes” with “Toto”. Then Mercedes will be a victim but not Toto. The rest is smoke and mirrors. What deal could Toto have got? A golden parachute in Liberty or FIA, special treatment for RP, …

    6. Why would Liberty make a special deal?
      Secretly, it would be a blessing in disguise if Mercedes decided to up and leave. It would instantly bring excitement and entertainment back to the competition. Therefore more fans watching the GPs and therefore more revenue for LM.

      1. Could have a point there with the exit clause. Make it easier for Mercedes to go out. Also ties in with Wolff ‘undecided’ about his future.

    7. Hehehehe Dieters crusade against Toto & Merc continues. Keep it up Dieter… only going to be one winner there!

      1. “Crusade” lol. Seems it’s you who’s on a crusade, if any.

        Someone dared to say something non-flattering about your team Hamilton I take it.

    8. Why is Dieter constantly trying to suggest Mercedes will leave? Is it because eventually, sometime this century, he’ll eventually turn out to be right?

      It’s so transparent now, it goes beyond bordering on parody; it is parody. It’s shtick. It comes across in Dieter’s articles, press conference questions, etc.

      Most satisfying was recently when Toto gave it right back to Dieter and called him F1’s “moral authority.”

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