Since its inception, GPFocus has often harked on about the upcoming negotiations for the Concorde Agreement. While the common fan may stay clear from the politics of the sport, keeping abreast of the latest twists and turns in reaching a compromise is vital to its future – even on a general level.

Basically The Concorde Agreement was born as a peace settlement to the titanic FISA/FOCA war, which raged for the best part of the late-1970s and early-1980s and nearly saw the complete disintegration of the sport.

Mercifully even the formation of the breakaway World Federation of Motorsport championship and the staging of an event in South Africa could not hammer the final nail into the coffin and after a variety of other commercially-damaging occurrences (such as race cancellations, Goodyear’s withdrawal, a House of Commons debate and the Manufacturer’s decision to break from their alliance with the Governing Body) a compromise was finally reached between the two warring parties.

Ultimately the agreement, which was finally signed on March 11, 1981, established the boundaries for both parties to operate. While the FIA would remain the owners of the sport’s commercial rights and its sporting arm continued to be responsible for the rules and regulations, they could no longer force through changes without compromise or notice. Equally FOCA was granted these rights to market and its members would be given more of a role on the sporting side – such as greater representation on the Formula One Commission.

However, although the constructors had managed to show their worth to the sport they also showed their political naivety by allowing Bernie Ecclestone to continue be responsible for the commercial development of the sport. Of course it was in this role that Ecclestone had helped the sport take significant steps and inadvertently led them head on into conflict with Balestre’s FISA in the first place; however at the time the constructors were more than happy to allow the Englishman take charge so they could focus on racing.[1]

Consequently this relationship continued for much of the 1980s and in this time the teams – now with the manufacturers under the fold – began to reap the rewards as the lucrative television rights began to pay dividends.  However, with more and more money and power, the sport’s political makeup changed from the teams on one hand and the Governing Body, flanked by the circuit owners on the other.

Instead, by the time of the second signing of the second Concorde Agreement in 1987, the power of race organisers had either been neutralised or had transformed to side with Ecclestone, who in turn had now formed a constructive and closer bond with the FIA. Subsequently FOCA was now in itself a separate entity and Ecclestone had effectively become the ringmaster as far as the sport’s future was concerned.

This was underlined with Max Mosley’s election to FIA President and the signing of the Formula One Agreement in 1995, which granted the commercial rights to the newly-created Formula One Administration for fourteen years.

Of course this was merely the confirmation of what had effectively happened years before. Now Ecclestone’s business was fully independent of the entrants and was the official commercial arm of the sport.

Unsurprisingly the news infuriated the teams, most notably Tyrrell, Williams and McLaren who refused to sign the fourth Concorde Agreement in 1997. However to combat this Ecclestone effectively used the old tactic of divide and conquer; offering larger dividends to teams as bait to side with him – eventually the three rogue entities were forced back into the fold with their tails between their legs.[2]

This approach would be replicated by Ecclestone many times over throughout the last decade, not least with Ferrari which has always sat at the crux of any negotiation process.

Therefore it is no surprise that the Scuderia will once again play a considerable role in the upcoming negotiations over the next Concorde Agreement – with the latest expiring in December next year. [3] While it often acted in its own interests Ferrari has come to realise the effectiveness of unity over the past few seasons. Subsequently, its prominent role has saw FOTA flourish into a considerable force and it is therefore no surprise to see The Independent report that DC Advisory Partners has been hired to help advise the teams ahead of the looming negotiation process, with a strong possibility that the teams may try to do what they never did back in the formative years and take an equity stake in the sport.[4]

Of course a major reason behind this was due to the change of ownership which was born out of the Formula One Agreement and the 100-year extension signed years later.[5] Ultimately not even the intrusion of the European Commission could stop Ecclestone floating the sport and eventually CVC Capital Partners from stepping in.[6]
However to do this the venture capitalists had to take out significant loans and since then have been using a significant chunk of the profits to pay these back.

Given this, there is little surprise that the teams have now appeared to act in their own interests. It was likely that they would demand a bigger slice of the cake anyway this time around, but buying a stake in the sport the group would go a step further and effectively begin to plug money from being taken out of the sport.

Nevertheless this isn’t guaranteed to happen; nor is the assured support of Ferrari, with CVC’s long-term commitment still largely unanswered and the Exor-News Corp bid not entirely blown out of the water.

What’s more the FIA will likely wish to have a greater say in the outcome of these negotiations, especially with the evident split between the commercial rights holders and the governing body.

Under Todt there have been considerable changes at the Place de la Concorde, most evidently in its recent road safety drives or its continued push for the development of green technology. Therefore, even with the remnants of the Mosley era still in place, it is unlikely that the governing body will surrender so cheaply as it did on a number of occasions under the old regime – such as the pitiful royalty payment structure agreed back in 1995.[7]

Of course these are only a few points to consider as the negotiations intensify over the next few months. Ultimately much of what has been mentioned is merely speculation, but with much having developed since the last compromise was reached it is likely that there will be a number of barriers to overcome before another stop gap can be agreed.


[1] Lovell, T. Bernie Ecclestone King of Sport. (Blake, London, 2008) pp. 135-146.

[2] ‘Concorde Agreement’ Wikipedia, (Accessed: 15/09/2011). http://en.wikipedia.org/wiki/Concorde_Agreement.

[3] ‘Concorde Agreement’ Wikipedia, (Accessed: 15/09/2011). http://en.wikipedia.org/wiki/Concorde_Agreement.

[4] Leftly, M. ‘Formula One considers Grand Prix equity stake’, (The Independent, Accessed: 15/09/2011) http://www.independent.co.uk/news/business/news/formula-one-considers-grand-prix-equity-stake-2354857.html.

[5] ‘Mosley’s 100-year deal close’, GrandPrix.com (Accessed: 15/09/2011). http://www.grandprix.com/ns/ns03944.html

[6] ‘Formula One Group’ Wikipedia, (Accessed: 15/09/2011). http://en.wikipedia.org/wiki/Formula_One_Group.

[7] Seward, J. ‘Now we are getting there…’, joesaward.wordpress (Accessed: 15/09/2011).  http://joesaward.wordpress.com/2011/09/15/now-we-are-getting-there/; Lovell, T. Bernie Ecclestone King of Sport. (Blake, London, 2008) p. 254.

 

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