There has been talk around Formula One paddocks about the impending deadline for F1 teams and Liberty Media to agree and sign the renewed Formula One Concorde Agreement, but what is it all about and how does it affect motor racing? Concorde Agreement is a contract between the Fédération Internationale de l’Automobile (FIA), the Formula One teams and the Formula One Group that regulates the rules on how the teams compete, how the revenue from broadcasting rights and prize money is split among the teams. To date, the first agreement was in 1981, and others in 1987, 1992, 1997, 1998, 2009 and the current agreement in 2013 which expires at the end of 2020 season. The agreement seeks to encourage professionalism, commitment by the competing teams to participate in every race and commercial success of Formula One motorsport. The deadline for the F1 teams to have signed this five-year agreement is set at the end of August 2020.
What is the Concorde Agreement?
The Concorde Agreement is a contract between the Fédération Internationale de l’Automobile (FIA), the F1 teams and the Formula One (F1) Administration. The purpose of the agreement is to regulate and guide the championship in terms of racing schedules, racing circuits and revenue distribution amongst competing teams or constructors. Furthermore, technical regulations like engine specifications, car designs, tyre configuration, safety standards, budget distribution including television revenues and price money constitute the agreement.
What the new Agreement means to Formula One
The new Concorde Agreement will secure the long-term future for Formula One championship and new regulations announced in October 2019 which will be effected in the 2022 season. The highlight of the regulations being the budget capping (spending will be capped to $175 million) and on track disparities between the competing teams allowing on-track wheel to wheel racing. Over the years of motorsport racing, Formula One has been the pinnacle of technology, pushing the boundaries of safety and competition to the highest limit and yet providing the excitement that the fans crave for. So the new agreement will provide a fair and equitable financial share for all the teams, futuristic sporting and technical regulations. All the stakeholders, motor sports governing body, FIA and the ten competing teams look set to agree and sign on the best interest of the sport.
Current (2013) Concorde Agreement
Under the past and current agreement, Ferrari has always been given preferential treatment and advantage over other teams in terms of revenue accrued. All competing teams receive a prescribed participation quota based on the season’s log standing for the Constructor’s Championship. The so called big teams like Ferrari, Mercedes, McLaren, Red Bull and Williams receive additional bonus for as a token appreciation for long service and success in the series. Furthermore, Ferrari gets another bonus for having participated in the championship since its inception in 1950. The sports commercial rights holder, Liberty Media has since been pushing for more equitable and sustainable agreement for all teams in the 2021 Concorde Agreement.
Reaction from Formula One teams
Ferrari, McLaren and Williams are the first teams to sign the 2021 Concorde Agreement in the ten team Formula One series. The remaining teams are yet to sign but it seems most of them are in agreement, so it is a matter of time before all of them put pen to paper.
After signing the new agreement, Ferrari CEO Louis Camilleri said:
“We are pleased to have signed up again to what is commonly known as the Concorde Agreement, which will regulate Formula 1 for the next five years. It is an important step to ensure the stability and growth of the sport,”
“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 1 World Championship, becoming an integral and essential part of its success, today as in the past and, above all, in the future,” he continued.
Williams Deputy Principal, Clare Williams echoed similar sentiments:
“The new Concorde Agreement represents a major step forward, for both Formula One and Williams. As one of the sport’s longest running teams, we are pleased to see the future direction of Formula One confirmed for the next era of racing,”
“The Agreement is a major milestone in the development of Formula One, and also represents a significant opportunity for Williams to continue on our journey back towards the front of the grid,” she said.
McLaren CEO Zak Brown said the following:
“F1 has taken another important stride on the road to a sustainable, strong future with the agreement,” said Brown.
“The new agreement compliments and builds on the great work of F1, the FIA and all the teams during the past few months on the future financial, technical and sporting regulations,”
“Everyone has had to give ground for the bigger outcome, which will be a more competitive, exciting and thriving F1 for future generations, which in turn secures a healthy sport for both participants and fans alike,” he concluded.
In conclusion, we expect all Formula One teams to sign for the new Concorde Agreement, perhaps this has already happened prior to publishing this post. The rules and regulations embedded in the 2021 Concorde Agreement will be implemented starting from the 2022 season, while the 2021 season will be regulated under the preceding agreement (2013 – 2019). The 2022 regulations will create a sporting environment that is financially fair and reduce the gaps between the racing teams as earlier illustrated.
The expectation and anticipation from both the FIA, teams and fans alike is very high on what types of car designs will be delivered in the 2022 season. The devil lies with the reality on the book, to transform it on the track is another challenge that the F1 teams will be working against including a budget cap that some may not manage with. It is interesting to see how the so called top teams will perform under the restricted budget and the rest of the field as the car designs, aerodynamics, power units and downforce are expected to be the same across the grid.