What is the new Concorde Agreement in F1 (Formula 1)?

Despite the hype surrounding championship battles and the intense rivalries between teams and drivers, Formula One is, first and foremost, a business.

And, as with any business that deals in billions of dollars a year and has brand deals with other billion dollar companies, Liberty Media, the owner of The Formula One Group, are under a lot of pressure to keep the drivers and teams that compete for them happy.

The Concorde Agreement is the solution to that problem, and we’ll explain everything you need to know about it, including what it means for Formula One and how it got its name.

Watch this video to learn more about the Concorde Agreement.

What is the Concorde Agreement?

Formula One’s regulatory body, the FIA, and the teams who enter the F1 World Championship have come to terms on the rules that each team must follow in order to compete under the Concorde Agreement.

This business contract specifies, among other things, how F1’s televised revenue and prize money will be divided.

You might be surprised to learn that, far from being a recent development, the Concorde Agreement dates back over four decades to a feud between F1’s regulatory bodies and racing teams.

In 1979, the Commission Sportive Internationale was dissolved and was replaced by the Fédération Internationale du Sport Automobile (FISA), which served the same purpose. FISA frequently clashed with the Formula One Constructors Association (FOCA), which represented the interests of the teams. Bernie Ecclestone was the CEO of FOCA at the time, and Max Mosley was his legal advisor, while Jean Marie Balestre was the president of FISA.

Several races were canceled or declared invalid as a result of the two organizations’ disagreements, which became known as the FISA-FOCA war.

Goodyear threatened to pull out of Formula One entirely, which would have been commercially disastrous for the sport, so Ecclestone convened a meeting at the FIA headquarters with all team managers, Balestre, and other FISA representatives.

After thirteen hours of negotiation, all parties present signed the first Concorde Agreement on January 19, 1981.

Key takeaways

The Concorde Agreement is a contract between the Fédération Internationale de l’Automobile (FIA), the Formula One teams Association (FOTA) and the Formula One Group.
This business contract specifies, among other things, how F1’s televised revenue and prize money will be divided.

How Long Has the Concorde Agreement in F1 Run For?

The Concorde Agreement is renegotiated on a regular basis to ensure that it remains current with the latest developments in both fiscal and technological terms.

Previous editions were signed prior to the most recent agreement in 2021 in 1981, 1987, 1992, 1997, 1998, 2009, and 2013.

What Is New in the 2021 Concorde Agreement in F1?

The latest Concorde Agreement, which runs from 2021 to 2025, is the first completed by F1’s new owners Liberty Media, led by CEO Chase Carey.

By signing the document, each team commits to that time frame, providing stability not only to those in charge of the world championship, but also to the teams, their staff, and their partners.

The new agreement includes groundbreaking budget caps to reduce financial disparities between teams, level the playing field, and close the performance gap.

It also includes a more equitable model for distributing prize money.

Both of these things indicate a significant shift in Formula One’s philosophy, with a greater emphasis now placed on providing a better show for spectators through closer racing and smaller gaps between teams.

The ultimate goal is to close the gap that has developed between the frontrunners and the midfield, which has been a source of frustration for those who want to see more than two or three teams and drivers compete for the championship.

But the new Concorde Agreement hasn’t been without hiccups, with it being delayed by the COVID-19 pandemic. Then, during the 70th Anniversary Grand Prix weekend, Mercedes team principal Toto Wolff expressed his displeasure with the terms of the new agreement, claiming that they would have the greatest negative impact on his team.

As a result, the agreement’s signing deadline, which had previously been set for August 12, was pushed back a week. Wolff later changed his mind after speaking with Chase Carey and declared his willingness to sign the new agreement.

On August 18, 2020, Ferrari, McLaren, and Williams announced that they had signed the new Concorde Agreement, while Formula One announced the following day that the other teams had also signed.

Why Is It Called Concorde Agreement?

After the lengthy conference at the FIA headquarters in Place de la Concorde in Paris, the agreement was given the name of the location where it was formed.

It is the largest square in Paris and was the site of many notable public executions, including those of King Louis XVI, Marie Antoinette, and Maximilien Robespierre during the French Revolution, when the square was temporarily renamed Place de la Révolution.

Concorde was the final name given to the square in 1830.

This name did not come up at random. The name concorde, which means “agreement,” was intended to herald reconciliation among the French people after the excesses of the Reign of Terror and the political upheavals of the late 18th and early 19th centuries.

So the FIA’s decision to make the terms of their agreement at a location literally named after the process has some poetic value. But yes, the translated name literally means the agreement agreement, so maybe it isn’t so clever after all.

Despite the linguistic ramifications of the name they chose, the Concorde Agreement continues to be a crucial link connecting Formula 1’s commercial and competitive sides.

Without it, we might not have seen the longevity of storied teams like Ferrari and Mercedes or the ability of more recent, unproven teams like Haas to compete without going bankrupt.

So maybe we should thank the agreement agreement.

The ideal brake balance that F1 drivers try to find is when all four wheels lock up at the same time.

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