What Is a Concorde Agreement

It is called the Concorde Agreement because the first agreement was signed in 1981 at the FIA headquarters on the Place de la Concorde in Paris. Bernie Ecclestone of OFAC organized a meeting of team leaders and FISA representatives. The meeting took place at the FIA offices at Place de la Concorde in Paris, France. At the meeting, they negotiated for thirteen hours at a time. On 19 January 1981, the first Concorde Agreement was signed. The agreement was named after the Paris square where the discussions took place. FISA and OFAC had a number of differences of opinion. Some teams thought that fisa preferred the big manufacturers. The teams were also unhappy with the way the money was distributed in Formula One. With the seventh Concorde contract expiring in December 2020, the new Concorde contract has been approved and signed by all participating manufacturers: Ferrari, Mercedes, McLaren, Redbull, Alpine (formerly Renault F1), Williams, Alfa Romeo, AlfaTauri, Hass, Aston Martin (formerly Racing Point F1), Formula 1 Group and the FIA. The agreement is a binding contract that defines the governance structure, the distribution of cash revenues/prizes to all parties involved and other business aspects of the business. In order for a constructor team to participate and participate in the championship, it must comply with the conditions mentioned in the Concorde Agreement.

Negotiations on the terms of replacing the 2013 agreement began in 2017 as part of broader discussions on the future of sport, but the deadline to reach an agreement was extended to 31 October 2019. It has been reported that the agreement is about to be finalised in January 2020. [14] However, it was ultimately delayed due to the COVID-19 pandemic. [15] During the 70th Anniversary Grand Prix weekend, Mercedes Team Principal Toto Wolff expressed dissatisfaction with the terms of the new agreement, which consisted of introducing a budget cap from the 2021 season and changing the distribution of prizes. Wolff believed his team would be the most negatively affected. [16] In response, the deadline for signing the agreement, which had previously been set at August 12, was extended by one week. However, after discussions with Chase Carey, Wolff changed his position and agreed to sign the new agreement. [18] The new Concorde agreement aims to protect the value of established teams by requiring newcomers to pay $200 million, divided equally among 10 existing teams, in exchange for the right to revenue sharing in the first year of their competition. So far, new entries only have the prize from the second year of the competition. [19] The agreement is, among other things, a commercial document that sets out how Formula 1 television revenues and prizes will be distributed – and are expected to expire at the end of the year. The basic requirements of the agreements are to be professional and increase the success of Formula One. The greatest requirement of the teams to participate in each race.

This makes Formula One better for broadcasters. Broadcasters spend a lot of money to broadcast the races on television. In exchange for the race, the teams were guaranteed a percentage of the sport`s revenue. On 27 March 2006, the five teams supported by the Grand Prix Manufacturers` Association – BMW Sauber, Renault, Honda, McLaren and Toyota – submitted their applications for the 2008 season and agreed to remain in the sport until 2012. [8] [9] On 14 May 2006, the five GPMA-supported teams signed a Memorandum of Understanding with the Commercial Rights Holders (CVC/Ecclestone), which served as the basis for the next Concorde agreement. [10] As a result, there was no full agreement for the 2008 season, as the memorandum, extensions and agreements with the other individual teams served as a temporary solution. A new trade deal to reduce financial disparities between teams, create a level playing field and close the performance gap on the track is the next part of this process. Since 1981, there have been six Concorde agreements.

The terms of all agreements have been kept secret. The secret was broken by race journalist Forrest Bond when the 1997 Concorde deal was published by RaceFax in 2006. [1] After months of discussion and deliberation, the 10 Formula 1 teams have now agreed on the terms of a new document known as the Concorde Agreement, which will bind them to the World Championship for another five years. Here`s what that means for the sport. The disagreements between FISA and OFAC became known as FISA-FOCA. This led to the cancellation of several races. Goodyear has threatened to stop supplying tyres to Formula One. It would have been a disaster for the sport. So far, there have been seven Concorde agreements (1981, 1987, 1992, 1997, 1998, 2009 and 2013). The eighth and most recent Concorde Agreement entered into force in 2021 and will last until 2025.

On 29 July 2008, the ten teams currently competing formed the Formula One Teams Association (FOTA) to negotiate the terms of the contract. Following a dispute between FOTA and the FIA in the first half of 2009, a new Concorde agreement was signed by Mosley and all teams except BMW Sauber. BMW Sauber had announced that it would retire from Formula 1 at the end of the season. The new agreement provides for the continuation of the provisions of the 1998 agreement. It continues until December 31, 2012. After the recent Concorde agreement was signed by all the teams, former Formula One CEO Chase Carey said: « In 1995, the FIA decided to transfer the commercial rights to Formula One from FOCA to the Formula One administration for a period of 14 years. In return, Ecclestone would make an annual payment. McLaren, Williams and Tyrrell protested by rejecting the draft Concorde agreement (negotiations of which began in 1993).

Ken Tyrrell, in particular, was furious that Ecclestone, as president of OFAC, had negotiated the transfer of the organization`s rights to his own company. Tyrrell also objected to the secrecy of the addition to the deal, arguing that the secrecy of the deal only benefited Ecclestone (by weakening the bargaining power of the other parties). On the 29th. In July 2008, the ten competing teams formed the Formula One Teams Association (FOTA) to negotiate the terms of the contract. Following a dispute between FOTA and the FIA in the first half of 2009, a new Concorde agreement was signed by Mosley and all the teams, although Sauber, in transition as the majority owner of BMW, recently announced its intention to retire from the sport at the end of the season and waited for some control of the team to be returned to Peter Sauber. before signing. The new agreement provides for the continuation of the terms of the 1998 agreement and runs until 31 December 2012. At the same meeting of the FIA World Motor Sport Council, a resource limitation programme was also agreed, as well as revised sporting and technical regulations for the 2010 season. [11] The agreements have the effect of promoting the professionalism and increasing the commercial success of Formula One. The most important factor in achieving this was the commitment of the teams to participate in each race, making the sport more reliable for broadcasters who had to invest heavily to acquire the TV broadcast rights. In return, the teams were guaranteed a percentage of the sport`s commercial revenue. On 18 August 2020, Ferrari, McLaren and Williams announced that they had signed the new Concorde agreement,[20][21][22] while Formula 1 announced the following day that the other teams had also signed the agreement.

[23] The new agreement, which is the first among Liberty Media`s new owners, will cover the 2021 to 2025 seasons and will come into effect on January 1, 2021. .