What Is The Concorde Agreement In F1? (Fully Explained)

We all know F1 as a much-loved global event, but without the conception of the Concorde Agreement, the sport may never have become what it is today. This can leave F1 viewers wondering what exactly the Concorde agreement involves and how it can have such a huge impact on Formula 1.

The Concorde Agreement is a contract signed by the Fédération Internationale de L’Automobile (FIA), all the Formula 1 teams, and the Formula One Group. The contract decides how commercial revenue and prize money is split, as well as the terms by which teams compete in races.

As of 2021, there have been eight iterations of the Concorde Agreement, each with varying degrees of complexity. In the article below, we will dive deeper into the history of the Concorde Agreement, discuss what it involves, and the effect the latest edition will have on Formula 1 going forward.

What Is The F1 Concorde Agreement?

The F1 Concorde Agreement is a contract signed by the FIA, Formula 1 teams, and the Formula One Group. Its aim is to capitalise on and grow F1’s commercial appeal, ensure the teams get their fair share of prize money and commercial revenue, and set the rules the teams will abide by.

Before the latest agreement in 2021, the previous editions were signed in 1981, 1987, 1992, 1997, 1998, 2009 and 2013. The agreements are signed periodically to ensure that Formula 1 evolves with the ever-changing commercial landscape of the sport.

The details of the agreements are largely kept secret between the involved parties, barring the 1997 edition that was published in 2005 by journalist Forrest Bond for racing site RaceFax.

Why Is It Called The Concorde Agreement?

The agreement took the name of the place where it was conceived, after a long meeting at the FIA headquarters at Place de la Concorde in Paris. The FIA remain based at the Place de la Concorde to this very day, with additional offices based in Geneva and Valleiry in the Alpine region of France.

Signing the agreement offers a guarantee that each team will compete in every single F1 race in the upcoming seasons. This offers broadcasters assurance that each race will contain the same teams and go ahead as planned, enticing them into investing in lucrative television rights packages.

When Was The Concorde Agreement First Signed?

The Concorde Agreement was first signed on January 19, 1981, at 8 Place de la Concorde in Paris. After 13 hours of intense talks, an agreement was reached, requiring all teams to participate at every event on the F1 calendar in return for the F1 television rights.

Back in 1981, Formula 1 was at a crossroads. The Formula One Constructors Association (FOCA), led by British business magnate Bernie Ecclestone, was constantly embroiled in disputes with the then president of the Fédération Internationale du Sport Automobile (FISA), Jean-Marie Balestre.

These disputes led to the cancellations of races and threats of an independent breakaway Grand Prix. Tire manufacturer Goodyear also threatened to pull out of their sponsorship deal with F1 if matters were not resolved, which could have proved catastrophic for the future of the sport.

Concorde Agreement Disputes In The 1990s

By the 1990s, the commercial landscape of Formula 1 had changed dramatically. Television rights had gone from being a welcomed yearly bonus to being a billion-dollar industry, and in 1995 the FIA transferred F1’s commercial rights to Bernie Ecclestone in a hugely controversial deal.

This deal required Ecclestone to make annual payments to the F1 teams, but was protested by McLaren, Williams and Tyrell Racing, who all refused to sign the 1997 agreement. Ken Tyrell, founder of Tyrell Racing, also rejected the disclaimer that kept the Concorde Agreement a secret from the public.

In the fall of 1998, a compromise was reached, and the teams signed the agreement that was in effect until 2007.

What Does The Concorde Agreement Mean For F1?

Without the Concorde Agreement, Formula 1 may have never achieved the commercial success it has today. The agreement offered a genuinely reliable and exciting package to broadcasters who, by televising it on a regular basis, helped F1 reach a wider audience than it ever previously had.

The fact that it’s periodically updated allows Formula 1 as a brand to keep up with its ever-changing viewership without tampering with too much, too often. It’s also a way that F1 can cover its own back, ensuring longer-term safety for itself and the teams represented within it.

What Does The 2021 Agreement Mean For F1?

In 2021, the latest edition of the Concorde Agreement was signed by all 10 teams, running until the end of the 2025 season. This is the first Concorde Agreement since Liberty Media Group’s acquisition of the F1 commercial rights back in 2016. It’s also the first Concorde Agreement to be signed without any influence from Bernie Ecclestone.

The 2021 Concorde Agreement promises to be one of the most impactful agreements in recent years, with the FIA hoping it will level the playing field and present F1 fans with closer, more competitive racing. The deal included a budget cap, much to the dissatisfaction of Mercedes team principal Toto Wolff, whose disgruntlements resulted in the deadline for signing the deal being delayed by a week.

The budget cap was implemented as a way of bridging the gap between the F1 super-teams and their smaller counterparts. It also ensures the long-term financial sustainability of Formula 1. The cap was originally set at $145 million but has since been reduced to $140 million as of 2022. The cap is to be reduced by a further $5 million in 2023.

As well as a budget cap, the latest Concorde Agreement will mean there will be a more equal share of the prize money awarded to the teams. This addition to the rules got a mainly positive reaction from the smaller teams, including Haas, whose owner Gene Haas had previously been undecided about committing to a further five seasons due to F1’s financial imbalances.

The latest agreement should usher in a new era for Formula 1. The greater levels of parity between the constructors should provide even more excitement for F1 fans throughout the next few years.

Final Thoughts

The Concorde Agreement regulates the terms under which F1 teams compete, including how prize money and commercial revenue is divided up and a promise to participate in every race. The 2021 Concorde Agreement included some of the biggest changes in recent years.