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Majority of teams sign up to new Concorde Agreement; Mercedes holding out?
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Darren Heath
Posted By: James Allen  |  24 Mar 2012   |  8:32 am GMT  |  36 comments

Today Bernie Ecclestone announced that the “majority” of the current F1 teams have agreed a deal to stay in the sport, which will lead to a new Concorde Agreement starting next January.

“I am very pleased to announce that we have reached commercial agreements with the majority of the current Formula One teams, including Ferrari, McLaren and Red Bull Racing, about the terms on which they will continue competing in Formula One after the current Concorde Agreement expires at the end of this year.”

This begs the questions, who is holding out and how many are in the majority?

The details of this deal are still sinking in for most of the F1 paddock. It comes as something of a surprise to some to see McLaren having gone along with Red Bull and Ferrari, which split from FOTA in December.

McLaren and Mercedes were very disappointed with Ferrari’s decision to put their own interests first and leave the teams’ association. Ferrari is the crown jewel in any Concorde negotiation and once they split off the game was up for the rest.

Red Bull also left and the signs in the last few weeks were that these two were close to doing individual deals with Ecclestone. Offers were clearly made to the other teams, in descending order of significance, but McLaren stayed solid with the other seven FOTA members.

Today’s announcement indicates that the McLaren board clearly felt they could not risk losing out in significant financial terms to their two main rivals. The fear would be that it would become like the Spanish football league where Barcelona and Real Madrid have far more lucrative deals than the other teams and therefore win everything.

“It’s good that we are not at war,” said Whitmarsh on Sky today, adding that a “majority” to him meant more than seven teams. “We need to work together to make all the teams sustainable, we need to control costs and build the sport and make it more exciting.

“We have to work out the details but we are an F1 team and we are concentrating on making sure that we have an acceptable deal for us and also a stable future for the sport.”

Mercedes are opposed to the plans leaked last week, for Ferrari as the Longest Standing Team, to have a seat on the F1 holding company board and even to have equity stake. They have not signed and there are question marks about Williams and Sauber, as I understand it currently.

I understand that the deal is longer than the standard five year deal and could be as long as 8 years. This means that Red Bull will be tied into the sport for that length of time with both its teams, which ends speculation about whether they might take their massive marketing budget to some other sport.

From Ecclestone and CVC’s point of view, having the majority of teams on board, signed up to what probably amounts to a heads of terms agreement to move forward to a Concorde Agreement during 2012, means that the business is now secure for up to seven years.

This, along with many long term contracts with circuits and TV companies, creates the ideal market conditions for either a floatation of all or part of the business or a sale. There are many options open to Ecclestone and CVC, but the succesful “divide and conquer” strategy employed by Ecclestone on this occasion has averted the threat of a teams’ breaking away, as we saw in 2009.

It also means that the teams will continue to earn well out of the sport, but will be left with a lingering feeling that they might have done even better if they had stayed together as a unit.

The signs are that Ferrari has pushed for a return of some F1 testing and it is known to be keen to see teams able to sell their old cars to smaller teams.

The interesting thing now will be to see what the FIA decides to do. Ecclestone has the teams on his side; is the FIA part of the future and if so will its president Jean Todt be able to improve the commercial teams of their involvement?

On paper the FIA owns the sport, Ecclestone and CVC have a 100 year licence to exploit it commercially. Where they fit into this brave new world will become clear in the next months.

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36 Comments
  1. Bill Nuttall says:

    While fiddling hard Rome burns at home.

    I just don’t get why the teams are so gutless, continually kowtowing to Bernie. Get the team bosses together, form a company, and they would have complete control over their own sport. At the moment they are giving up millions (and even billions in the long term) to what is effectively a protection racket.

    Why can’t they make it happen?

    1. W Bennet says:

      Spot on. One team in particular with a long history in F1 has a track record of self interest and short termism by doing a deal with Bernie which splits the other teams resolve to take control of F1. It’s Chairman then duly complains about the lack of influence on matters such as regulations (too much aero), lack of testing, spending, third cars, quality of team participation!

    2. If the teams get together and break away from CVC, where do you propose that they race. All the tracks have contracts with Bernie.

    3. Bakdraft says:

      Put that down to one team… Greedy Ferrari. Every time Bernie makes a ‘special deal’ to Ferrari they get greedy and give in. That leaves all the other teams powerless.

      Bernie knows exactlywhat to offer Ferrari to makethem crumble.

      If Ferrari had been successful over the past few years, FOTA might have survived. But as they have gone frombad to worse, which they see as being due tolack of testing and consequently budjet cuts, they feel when they get more special priviliges it will return them to their glory days…

      Ferrari have never (in my 22 years of following) been about anything else other than themselves..

      They were always going to be the Judas..

      1. American_F1_Fan says:

        +1

    4. Blaize says:

      Cause the teams dont trust each other. Its like a Bank Hiest, With each team wondering who’s going to betray them first and perhaps they should get in there before the others.

      Thigs i’d like to see in a Concorde Agreement in my Dreams

      -3rd cars or Smaller Capped Budgets for car development (maybe in Caterham or Saubers Budget range)
      -Aero similar to the 90′s with Turbo V10′s
      -No Kers
      -Keep DRS
      -Even Smaller Team Personnal
      -Finicial Loans to new Teams in their first 3 Seasons
      -3rd cars with rookies
      -More Astroturf on Run Offs
      -and finally Teams own much more of the Sport

      (Everly Brothers – Dream, Dream, Dream, Dream, Dream, Dream ….)

      1. shankar says:

        it is not the sport that is gonna suffer due to FOTA breakage, it is us the viewers who are gonna suffer watching the endless politicking of bernie-ferrari-fia and other teams. sad :(

    5. Bakkster says:

      Worked great for Indy/Champ car. What could possibly go wrong?

  2. wexes says:

    100 year license to exploit? Hoping i can land such a deal in my lifetime!!

    1. Sebee says:

      It’s not hard at all. Just get your friend Max into position of power and the rest is just a formality. That is how you quickly become a billionaire.

      1. Cookoomashu says:

        The way Ecclestone came to get this 100 year deal is quite a tale.

  3. Bones says:

    You’ve got to admire Bernie, he’s 81, a billionaire and he still has the motivation to play hardball until he gets what he wants.

    1. Atef Girgis says:

      Bernie will still be around for the next agreement .

  4. W Bennet says:

    So depressing. Ferrari and Redbull have made a monumental error of judgement. This was a once in a lifetime opportunity for the teams take back a substantial proportion of the revenues but self interest has won the day.

    The commercial value of F1 to CVC was zero without a future agreement involving the teams. So have Ferrari and Redbull done a deal with CVC to buy a chunk of F1 equity, on the back of these teams breaking up FOTA to do a deal with Bernie?

    In otherwords, the combined package of team payments + equity deal amount to another special deal for certain teams??

  5. Rob Newman says:

    Typical Bernie and typical Ferrari. I am not surprised.

    1. k5enny says:

      ‘That ferrari may never get a sniff of a podium again…

      1. Rob Newman says:

        You spoke too soon mate.

  6. Il Leone says:

    But even with Bernie’s help, Ferrari can’t seem to get the basics of building a decent F1 car right. Would the show be that worse off if they did go it alone?
    Set up a 14 car Ferrari championship Mr de Montezemolo and see how far that takes you.

  7. Roberto says:

    Thank God the season started and this is part of it as has always been, the intrigue, teams complaining about ilegal parts, etc. F1 without this will be only dull races, that’s why i love the sport

  8. Erik says:

    Something strange is going on, there must be more to this.. Last time the Concorde agreement was a major battle, whereas this time it’s all going very smoothly. What doesn’t make sense is that we know the teams wanted greater revenue share than they have right now. Does this mean they got it? Or at least the big three teams that this article mentions?

  9. Nil says:

    A couple of questions:

    Don’t Williams get a significant share considering their historical significance to the sport?

    Will Mercedes F1 will stay as a constructor beyond 2014 if they don’t get a significant share under these present conditions?

    1. James Allen says:

      Yes

      Hard to say but probably. F1 is important to them, but they are very angry

  10. elie says:

    Yep, Ferrari again !

  11. [MISTER] says:

    It was pretty clear from last year that this is going to happen. You can blame Ferrari, RedBull or whoever you want..but this was caused by all teams.

    This started because of the spending issue. RBR accused by Ferrari (at least) by over-spending and since nothing was done to penalise that..Ferrari had to exit and do his own thing.

    I would’ve done the same. Why stay in FOTA and most likely get less money from Bernie if staying in FOTA had no advantages.

    The main advantage as I see it in FOTA, was to control the spending..and since this was not happening..why stay there?
    Ferrari had the option of staying with FOTA and get less money from Bernie..but in exchange the costs were under control and those who went over the budget would be penalised or leave FOTA and get the only advantage possible by being out of it..more money from Bernie.

    I see all the teams in FOTA guilty of this situation because they didn’t do anything. They had no guts to stand together and penalised those who spent more then agreed (if that was indeed the case).

    I see people here accusing Ferrari, but what option would Ferrari have if FOTA was useless? They had to go their own way. That’s how I see it.

  12. richard says:

    Ferrari want to sell their old cars? Don’t think they will get much for this year’s, I’ll trade them my astra…

    1. Bones says:

      You’re gonna get ripped off!

  13. iceman says:

    Does this deal tie Red Bull to Formula 1 any more tightly than previous concorde agreements tied Renault, BMW, Honda, Ford, Benetton, Toyota, Minardi, Midland, Spyker or Virgin?

    1. CTP says:

      Very good point.

  14. Stephen Kellett says:

    You write that this is probably a “heads of agreement” deal as if that is significant. Quite the opposite is true.

    If it is a “heads of agreement” deal then none of the deals signed are binding. Any of the teams can walk away when they want.

    Only a real contract has any merit. Heads of agreement is worthless. 30 seconds on Google will let you verify this fact.

    Its a real shame that Ferrari feel they need to have unequal terms to compete with the other teams and that the rest of the teams don’t stand their ground.

    It’s nonsense that without Ferrari F1 means nothing. If the others stood their ground you’d have an F1 championship with F1 and a bunch of no-names and a FOTA championship with long standing teams of pedigree. Wouldn’t take more than a year or so before Ferrari realised any victories they had in F1 like that meant nothing.

  15. Ashwin says:

    James,

    Does this mean that McLaren have left the FOTA or McLaren are still in the FOTA and part of the new plan which Bernie has proposed?

    Is Mercedes angry for the new plan and/or for the McLaren’s change of standpoint?

    Thanks a lot.

  16. Jay says:

    Horrible, just horrible. I hope Mercedes leaves and takes their engines too.

  17. Andrew Kirk says:

    Do you see this being one of the last great deal Bernie does before he finally retires? At 81 must surely beginning to slow down and take things easy tho I guess that is never Bernie’s way!

  18. HFEVO2 says:

    As others have said, Ferrari have had a privileged position in F1 which is not really justified when you look at overall results.

    The most unhealthy thing in this whole saga is the possibility that Ferrari alone may be offered a seat on the board and allowed to take an Equity stake in F1.

    This would surely be unacceptable to the fans and every other team but they got the guts to refuse to sign on the dotted line while this is a possibility ?

  19. Look at it from Mercedes’ position…at the end of 2009 they spent a lot of money to acquire Brawn GP, to give themselves a factory team at the time that every other manufacturer was either leaving the sport (Toyota, Honda, BMW) or retreating to engine supply only (Renault). Two and a bit seasons on from that expenditure, their own team has yet to win a race, and right now it does not look like that will change, despite an enormous amount of investment in technical leaders in the last 12 months. They are being beaten by their customer team (McLaren). If I was a board member at Mercedes-Benz, I would be asking Norbert Haug “where is the RoI Norbert? Why are we doing this?”.
    If the current deal in F1 is not good enough for Mercedes, they can always leave at the end of the current engine formula, sell the team for whatever they can get for it before then, and exit the sport. (I bet that Craig Pollock is on his knees praying right now that this is what happens, so that PURE can have some customers for its engine).
    I think the “majority of teams have signed up” is a public leak by a certain Bernard Charles Ecclestone to put pressure on the laggards. I assume Bernie knows what he is doing, otherwise F1 may find itself short a major manufacturer soon.

  20. CTP says:

    James, it seems harsh for your headline to read “Mercedes holding out”… kind of implies they’re driving the greedy bus, not that they’re likely getting stiffed in this whole deal in comparison to their 3 main peers.

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