F1’s Concorde Agreement Explained

F1's Concorde Agreement Explained

F1’s last Concorde Agreement was signed by the teams in 2020, and now that a new team (or perhaps multiple teams) are attempting to enter F1, it felt like a good time to explain what the Concorde agreement is, what it means for the hopes of new teams entering and why it is separate from the formal FIA expression of interest process, which is the process where to FIA either accepts or denies a new teams bid.

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The Concorde agreement is a contract between the FIA, F1 Management and the F1 Teams, which sets the terms by which the teams compete in races, including the fees the teams receive from the promoters of each event, and the way the revenue from the television rights is split between the teams in terms of the prize fund, as well as other funds such as the heritage payments that teams such as Ferrari receives.

The understanding of the latest Concorde agreement is that the split the teams get from the revenue of F1, is 50%, split between the Prize Fund and those heritage payments etc. 

Given that F1 revenue was around 2 billion dollars in 2021, this contractual agreement is of massive importance to the teams.

The actual Concorde agreement is kept strictly confidential, and only the Teams, the FIA and F1 management know the full details of its contents. Thanks to the internet though, we usually get an idea of what’s included in it.

There was one that leaked, the 1997 concorde agreement was leaked by RaceFax in 2005.

History of Concorde Agreements

The first Concord agreement was signed into affect back on 19th January 1981. It was signed in the FIA’s headquarters in the Place de la Concorde in Paris, hence the name.

The contract was the result of a stand off between the FIA (which was then FISA) and F1 (which was then FOCA). Bernie Ecclestone led the teams to call off races, and run others without the FIA, with the plan being to set up the World Professional Driver’s Championship as a separate entity if the FIA didn’t cave to their demands. 

Although there are a variety of reasons and the different sides have their reasons for this dispute, Ecclestone and the England based teams, were not happy with FIA president Jean Marie Balestre changing the technical rules in a way that would favour the manufacturer teams, especially Renault, which Bernie and the British teams were sure was around a French man supporting the French team.

After a long night of arguments the Concorde agreement was signed, a compromise was made on the technical regulations and the teams agreed to show up to every race. Crucially for Ecclestone, the rights to the television broadcasting was “leased” to FOCA, which is what helped to stop F1 from going down the complete control of FIA route, like FIFA would with football.

This agreement expired on December 31st 1987, and there have been 7 more agreed since.

The Latest Concorde Agreement

The latest agreement was signed on the 19th of August 2020, coming into effect on January 1st 2021, running until the end of 2025. This latest concord agreement changed the structure of the prize money distribution and crucially introduced the cost cap, an item which FIA President Max Mosley failed to achieve over a decade earlier…although the orgy he was allegedly caught at, which was allegedly Nazi themed, didn’t help his cause.

Initially Toto Wolff didn’t want to sign this new agreement as he assumed that it would most effect his team…luckily this didn’t happen and Merc won the next two…oh…moving on. 

What it means for the Andretti bid.

Crucially for what’s happening today in F1, the teams agreed on a 200 million entry fee, which would be split amongst the current ten teams if a new team entered. In return the new team would be entitled to a share of the prize money in its first year of competition, whereas before any new team would only get to share in the prize fund from its second year onwards.

While the rest of the Concorde agreement has managed to stay in a shadow of secrecy, it has now been widely reported that it includes a strong Veto from the F1 Management over any new team and that the teams have some sort of say over this also, which is why the Andretti deal is causing F1 itself to be quite than usual on the matter.