Monday, April 10, 2006

A peek inside F1: The Concorde Agreement

Since I haven't yet finished watching WRC from France, DTM from Hockenheim, LMES from Istanbul, BTCC from Brands Hatch or British Superbike from Donington, I'll have to hold off on a weekend review. Look for it tomorrow. In the meantime......

I just received a VERY interesting document: it's the 1997 Concorde Agreement, the contract between the FIA, the teams and the commercial rights holders in Formula 1. This document is supposedly confidential but expires in 2 years and has been systematically leaked by all parties to suit their own agendas recently anyway. So I don't feel any remorse in reading and commenting on a supposedly "secret" document. So, in no particular order, here's some thoughts and notes on what I saw.

Over time, it's been the teams who have been complaining about not getting what they deserve, yet the first thing I noticed on reading the document was a clause that clearly shows all the Michelin-shod runners were in breach of the agreement at last year's US Grand Prix. In section 4.2 the teams agree to grant exclusive rights to the FIA to their performance. In the following section they also undertake to do nothing which may be prejudicial to the image and dignity of Formula as a high-class sport. Clearly refusing to run the USGP is a breach of contract.

There's intriguing definitions of the "power structure" in F1. Specifically it defines the role of the F1 Commission and the World Motor Sport Council. The Commission is comprised of:

*1 vote for each team in F1 for 2 or more years
*2 votes for European promoters
*2 votes for non-European promoters
*2 votes for sponsors (delegates chosen by teams)
*1 vote for FIA President
*1 vote for F1 Commission President

There's an interesting clause which merges 2 votes if they have a commercial interest in each other e.g. it's possible that once Toro Rosso has been in the sport at least a year, it may not get a vote, since Red Bull, already a voting member, has commercial interest in it. The Commission in turn has one its members on the WMSC, as does the commercial rights holder. The only other individual to serve on both bodies is the FIA President, currently Max Mosley.

Down in section 10, "Entries", it says that parties agree to endeavor to provide a minimum of 16 cars at an event. Initially it allowed for F3000 cars to make up a shortfall, but this has since changed to allow the FIA to nominate competitors to field 3 cars. No mention of who pays for that...

The contract is written in accorance with English laws, even though the FIA is French!

Of the 15 original teams listed on the agreement only 3 remain with the same name.

The penalty for missing an event is a minimum of $350,000 per car. Wow!

In regards to payments from the commercial rights holder of prize money, transportation costs and television revenue, the term "top ten competitors" and "top 20 cars" is often used. This is the first season for a while that there have been more than 20 cars, meaning that those tail-enders are really fighting hard for a LOT of money. It probably means that the most expensive team to run in F1 right now, in terms of out-of-pocket expenses, is Super Aguri, since they are also not running any significant sponsorship.

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