The Grand Prix Drivers’ Association calls for a restructuring of Formula 1 for a more sustainable and reliable future in F1. Here’s a little background on their concerns. As in: almost read it reversed to see their point.
[image source: wikipedia]
I have been working on an article on the Concorde Agreements for some time with the help of Forrest Bond of RaceFax.com. He was the one who published the 1997 Concorde Agreement in 2005, but he also has copies of the 1992 and 1994 its amendments. This is an original article from him, reviewing the history of the contract that governed F1 for decades as we are witnessing the side effects of its absence.
The Concorde Agreement
What it was, how it came about, and how it was lost
By Forrest Bond
As in life, there are few absolute certainties in motor racing. One is the struggle for power between those who ostensibly govern the sport and those who are governed. While there are cyclical periods of relative stability in the relationship, the over 100-year history of all the major series is frequently characterized by seemingly longer periods of contention, such as the now long-running battle which has dominated Formula 1, the cost of competing.
Money, and the control that it represents, has frequently been at the center of Formula 1's power struggles, not least during the late 1970s and early ‘80s, when the sport was dominated by what came to be called the FISA-FOCA War.
At the time, the cost of racing in F1 had exceeded the financial rewards for most of the participating teams. Even the most prosperous recognized that vast sums were being left on the table by the governing body, FISA (the International Federations of Automobile Sport), chiefly through the failure to capitalize on the sport’s commercial potential, chiefly through an embrace of the increasing global spread and de-nationalization of television.
That realization first occurred to Bernie Ecclestone, then the owner of the Brabham team. Assisted progressively by Max Mosley, one of the founders of the March team, Ecclestone successfully made the case for his contention to the other team owners, and became the head of their collective bargaining body, FOCA (the Formula One Constructors Association).
We need not here drag the reader through the details of the long-running FISA-FOCA War. Suffice to say that Ecclestone and the teams prevailed, not so much through their strategy and tactics, as through the ultimately ineffective campaign waged by Jean-Marie Balestre, then head of FISA, and shortly to become head of its parent, the FIA (the International Federation of the Automobile).
Skipping ahead for a moment, we should note here that Balestre was elected president of FISA’s parent body, the FIA (the International Federation of the Automobile), in 1991, his position at FISA being taken over by Mosley, who thus became the fox in Balestre’s hen house. In late 1993, Mosley contested Balestre presidency. The Frenchman conducted an optimistic, ineffective and ultimately losing re-election campaign. FISA, which under various names had existed since 1922, was quickly folded up by Mosley, F1 governance, by then in limited form, reverting to the FIA, which is to say, to Mosley.
What reduced the FIA’s governance of Formula One was what amounted to the FISA-FOCA War’s concluding peace treaty, though it would ultimately fail to end hostilities. That document was the original Concorde Agreement, drafted largely by barrister Mosley, under the guiding hand of Ecclestone. It was effectively a contract binding the teams and the FIA/FISA, and it came into force with the 1981 F1 season.
Accepted by Balestre, it gave the commercial rights to the teams’ organization, FOCA, which were to be exercised on their behalf by Ecclestone. In addition to control over the sports’ commercial income and its distribution to the teams (and the FIA), the first Concorde also established committees and procedures for changing the rules governing race car and engine design, and the detailed structure of the competitions.
Ecclestone’s key contribution was to recognize the mutual value inherent in the global proliferation of commercial television, and the concurrent decline of state-run broadcasting networks. What Ecclestone was the first to recognize was that broadcasters needed eye-ball-grabbing programming, particularly the kind which would bring masses of people to daytime weekend viewing. Sport in general, and Formula One in particular, was the perfect solution.
Ecclestone dictated a clean-up of the teams’ presentation at events — uniform clothing for all team members, for example — regularized the calendar of Grands Prix, and sold the package to broadcasters around the world. That produced a financial windfall and, in turn, increased the value of the series to event promoters, and of teams to commercial sponsors. Turning on the cash spigot, Ecclestone thus ushered in the era of the millionaire team owners.
With money flowing to the teams in unprecedented, even un-dreamed amounts, the team owners evidenced little interest in how Ecclestone promoted the sport, their focus being almost exclusively on racing.
Over the next few years, the Concorde was redrafted or amended, in 1987, 1992 and 1994. Throughout, Ecclestone acted as agent for FOCA, which is to say, the team owners, through control of the commercial rights to Formula One. Then came the 1997 Concorde Agreement, and with it a fundamental change in the sports’ power structure.
Under the terms of the 1997 Concorde, the commercial rights shifted from the teams, via FOCA, to Ecclestone as the “Commercial Rights Holder.” Going forward, Ecclestone’s company would assume most financial risks, and distribute a percentage of the revenue from television, films and the fees paid by race promoters to the teams.
The transfer of power was agreed to by Ecclestone’s old friend Mosley, as head of the FIA, and by the team owners, by virtue of signing the ‘97 Concorde.
Reflecting divisions among the teams during the FISA-FOCA War, the original Concorde divided the team into ‘manufacturer’ and ‘independent’ (mostly British) groupings. For purposes of the ‘97 Concorde, the manufacturer teams were Ferrari, Benetton, Minardi and Sauber. The independent teams were Ligier (then run by Tom Walkinshaw), McLaren, Lotus, Tyrrell, Williams, Larrousse, Jordan, Pacific, Simtek, Arrow and Forti.
Among them, only McLaren’s Ron Dennis, Ken Tyrrell and Frank Williams objected, initially withholding their signatures. Ultimately, Tyrrell settled for cash from Ecclestone, while Williams and Dennis retained a law firm, agreeing to sign the Concorde in exchange for the right to participate in a possible public offering of one of Ecclestone’s companys. The public offering never happened, and ultimately both team owners filed suit against the law firm which had represented them, which was settled out of court, the terms undisclosed.
The transformation of Formula One which Ecclestone had engineered had reversed the old adage that the way to make a small fortune in racing was to begin with a large one. His wheeler-dealer business acumen and, some said, cutthroat practices had made the team owners famous to a global audience of millions, and wealthy. Where once drivers had stripped to the underwear in full public view to suit-up for a race, motor coaches proliferated. It was assumed that Ecclestone — their guy — would continue to take care of them, a view which only through hindsight seems naive. But if, with the transfer of power effected by the 1997 Concorde Agreement, Ecclestone continued to lavish millions on the teams, his ‘cut’ quickly made him a billionaire, one of the wealthiest men in England, and Formula One’s ringmaster and king-maker.
A succession of Concorde Agreements continued Ecclestone’s iron grip on the commercial rights until it all began to come apart in the late 1990s. The teams, increasingly dominated by major auto manufacturer/owners, began the second F1 war, this time against FIA president Max Mosley. Ultimately, that led to Mosley’s departure in disgrace, the end of the Concorde — replaced by individual contracts between the Commercial Rights Holder, which a cashed-out Ecclestone fronted, but no longer owned — and a shift in power from Ecclestone back to the teams (particularly the manufacturer teams). In a sea change laced with irony, the contest for control of the sport had come full circle.