Concorde Agreement

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The Concorde Agreement is a contract between the FIA, the Formula One teams and Formula One Administration which dictates the terms by which the teams compete in races and take their share of the television revenues and prize money. There have in fact been five separate Concorde Agreements, all of whose terms are kept strictly secret: the first in 1981, others in 1987, 1992, and 1997, and the present agreement in 1998, which superseded the 1997 agreement and is due to expire at the end of 2007.

The effect of the agreements is to make the sport more professional than it originally was and to increase its commercial success. The most important factor in achieving this was the obligation of the teams to participate in every race, hence making the sport more reliable for broadcasters who were expected to invest heavily to acquire television broadcast rights. In return the teams were guaranteed a percentage of the sport's commercial revenue.

Contents 1 1981 2 1987 3 1992 4 1997 5 1998 6 References

[edit] 1981

In 1979, the Commission Sportive Internationale, an organization subordinate to the FIA which was at that time the rule-making body for Formula One, was dissolved and replaced by the Fédération Internationale du Sport Automobile, or FISA, which would serve the same function. FISA clashed repeatedly with the Formula One Constructors Association (FOCA), which represented the teams' interests. FOCA's chief executive at the time was Bernie Ecclestone and his legal advisor was Max Mosley, while the president of FISA was Jean Marie Balestre.

The two organizations' disagreements, which came to be known as the FISA-FOCA war, resulted in several races being cancelled. Goodyear threatened to withdraw entirely from Formula One, an event which would have been commercially disastrous for the sport, so Ecclestone organized a meeting of team managers, Balestre, and other FISA representatives at the offices of the FIA in the Place de la Concorde, Paris, France. On January 19, 1981, after thirteen straight hours of negotiation, all parties present signed the first Concorde Agreement, named after the plaza in Paris where the discussions took place.

The contract's terms remain largely confidential, though its known stipulations required the signatory teams to appear and compete in every race and guaranteed their right to do so in order to assure the sport's newly-acquired television public that they would have a race to watch. Also, perhaps most importantly, the agreement granted FOCA the right to televise Formula One races — this right was "leased" to Formula One Promotions and Administration, a company established and owned by Bernie Ecclestone. Another important element was the stability in rules, described as protecting the teams from "the whims of the governing body".^[1]

It expired on December 31, 1987.

[edit] 1987

[edit] 1992

[edit] 1997

In 1995 the FIA decided to transfer Formula One's commercial rights from FOCA to Formula One Administration for a 14 year period. In exchange, Ecclestone would provide an annual payment. McLaren, Williams and Tyrrell, protested by rejecting the proposed Concorde Agreement (negotiations for which started as early as 1993). Ken Tyrrell in particular was enraged by the fact that Ecclestone, as President of FOCA had negotiated the transfer of the rights from the organisation to his own company.

The three teams refused to sign the proposed Concorde Agreement, initially with the support of the remaining teams. However on September 5, 1996 the new Concorde Agreement was signed by all the teams except McLaren, Williams and Tyrrell. The agreement was to run from January 1 1997 to 2002.

[edit] 1998

By taking a stand against the actions of Bernie Ecclestone, the FIA and the wider commercial aspects of Formula One, the three teams lost both influence in the sport and income which they would have received as signatories. A compromise was reached and on August 27 1998 the 1998 Concorde Agreement was signed which accommodated the three teams and which is due to expire on December 31, 2007.

After the 2004 season, the three banks who together own 75% of SLEC, the company which controls Formula One, sued Ecclestone for more control in the sport's finances. The prospect of ousting Ecclestone gave credence to several car manufacturers' threats to form a rival series, the GPWC (now the Grand Prix Manufacturers’ Association). On December 7, 2004, at a meeting attended by the bosses of all the teams but Ferrari, Ecclestone offered a payout of £260,000,000 over three years in return for unanimous renewal of the Concorde Agreement, which would guarantee the continuation of Formula One in its present form at least until the expiration of that contract. On January 19, Ferrari announced it has signed an extension to the 1997 to expire on December 31, 2012, making a rival championship series much less likely. Later in 2005, Red Bull and Jordan/Midland also signed an extension.[1] On the 7 December 2005, Williams F1 became the fourth team to sign an extension to the agreement.[2] On 27 March 2006 the five Grand Prix Manufacturers Association-backed teams signed up to the 2008 world championship.

[edit] References

• The Economist: Grand prix, grand prizes
• GrandPrix.com: Who owns what in F1 these days?
• European Commission