JULY 22, 1996
THERE is a quiet battle going on in Formula 1 at the moment over the 1997-2001 Concorde Agreement, but the signs are that unless compromise can be found bigger problems could develop as the deadline of the end of the year draws closer.
McLaren and Williams are unhappy with the allocation of F1 prize money, claiming that Bernie Ecclestone is taking more than his fair share of revenues while the teams - who are putting on the show - are gaining only a pittance. The new Concorde Agreement increases the prize money, but McLaren and Williams want more. This is understandable as in recent years prize money has been limited to as little as $3m a year for a top team - depending on the results gained.
At the same time Ecclestone has been making more than 10 times that amount - and probably a great deal more as profits from F1 multiply.
F1 revenues have been growing dramatically in recent years, but the current Concorde Agreement has kept down the prize fund. The new Concorde Agreement offers better terms for the teams - and most have accepted that as being enough.
Recent estimates, however, suggest that there is about to be an explosion of income in Grand Prix racing and in five years the prize fund being offered will be a pittance for the F1 teams. Ecclestone is known to want to turn Grand Prix racing into a billion dollar annual business within the next few years - at which point, teams argue, a couple of million dollars will cease to be significant as prize money.
The teams are to get 47% of the revenue from the sale of TV rights. These are expected to top $100m a year within the next couple of years.
Merchandising is beginning to be taken seriously in F1 and this could easily produce hundreds of millions of dollars a year. Teams will get a lot of this money.
But where they claim there are losing out is on the money which is being swept up by Ecclestone from fees to hold races, trackside advertising and hospitality. Current estimates suggest that within a couple of years race organizers will be having to pay as much as $15m a year for the privilege of holding a race. In addition, in order to secure a race, they are being forced to sign over all their advertising and hospitality - worth as much as $5m a race - to Paddy McNally's Geneva-based Allsport Management. With a 16-race calendar - and there may be more races in the future - this will mean income of around $280m a year. Ecclestone's FOCA Television is currently experimenting with "virtual advertising" - which means that different countries will see different trackside advertising on TV - and that could multiply advertising revenues.
Williams and McLaren are arguing that when you add up all the revenues the figures amount to $300-400m - and the teams are receiving only around $50m between them. The rest is going to Ecclestone, the FIA and McNally. What happens to McNally's money is not clear as its financial records are covered by Switzerland's protective legislation.
The team bosses feel that Ecclestone and FIA boss Max Mosley should be more generous - or less greedy - when it comes to prize money.
Complaining is one thing, but actually doing anything about the situation is quite another. With some of the teams having already signed the new Concorde Agreement, the teams are divided - and that means that, as usual, they will probably be conquered.
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