AUGUST 26, 1996
Concorde drama goes public
This includes a variety of radical changes to the regulations including two-day Grands Prix, 17 races a year and a completely revised financial package which give the teams more money. The 1997-2001 Concorde Agreement has been signed by seven active F1 teams over the last 18 months. These are Arrows, Benetton, Ferrari, Jordan, Ligier, Minardi and Sauber. Forti has also signed but is currently not competing, while Williams signed the agreement but later withdrew. Tyrrell and McLaren have refused to sign.
Not all of the signatory teams agree with the full package announced by the FIA, which appears to be using the split between the teams to push through items it would like to see changed in F1 in the future. The details announced will probably be modified in the weeks ahead as compromises are made.
The issues involved have been blurred a great deal by smokescreens being put out by the various vested interests involved, citing safety and other issues which have no relevance at all in the dispute. It is, fundamentally, a simple dispute over money. The three rebel teams do not think that they are getting a fair share of the revenues in F1, despite the fact that the new Concorde Agreement will actually bring them a great deal more money than previously. They argue that as F1 revenue is going to increase dramatically within the next few years they should be getting a bigger slice of the pie because they provide the show.
They appear to have believed that they have sufficient political clout in the sport to force Bernie Ecclestone to change the financial structure still further but the FIA's response suggests otherwise.
Rather than go on negotiating the FIA has simply declared that the three teams which are unwilling to sign can compete in the World Championship but will have less political power and less money. The FIA cannot be challenged legally on this as the rebels can become signatories if they can convince 80% of the other teams to let them in.
Most teams seem happy with the majority of points in the new Concorde Agreement, although all have issues which they would like to see modified. Thus it is unlikely that all the issues set down as fact by the FIA will become reality next year.
The major points in the Agreement can be divided into three basic groups: political changes, sporting changes and financial changes.
The significant political changes are that alterations to the sporting and technical regulations can now be made if 80% of the signatory teams agree (previously it was 100%). The membership of the F1 Commission will also change with six teams being represented, but these being the top five signatory teams in the previous World Championship, plus the team which has completed in the most F1 World Championships (Ferrari).
The sporting changes include the commitment of the teams to run in all the events for the duration of the five year agreement; the guarantee that they will provide a minimum of 20 cars (thus opening the way for possible three-car teams); the agreement not to compete in any other open-wheeler racing without FIA consent and the acceptance that they cannot change the names of the cars for the duration of the agreement.
In terms of day-to-day changes to the rules, the agreement suggests that races take place over two days rather than the current three-day format. The theory is for Saturday to consist of practice and qualifying with spare cars allowed but with a 28-tire restriction for the weekend. Tire manufacturers may try a maximum of two sets of a second compound in free practice but must then decide which compound to use for the rest of the weekend. This means that tire companies will have to double production and transportation and is probably just a negotiating gambit by the FIA to get the tire companies to agree to run treaded tires.
The two-day format is also unlikely to happen as race organizers will not agree because it will cut into their income. As a result Grands Prix will either be considered individually or the FIA will agree to go back to three-day meetings so long as teams agree to allow 17 races. There will be stated limits for the seasons, however, with all races in 1997 and 1998 taking place between March 10 to October 31 and from 1999 and beyond between February 21 to November 7.
In an effort to cut costs the agreement proposes banning testing anywhere in the week preceding a race or in the period between the last race of the season and December 1. This is virtually impossible to police because teams will simply use independent operations to do their testing for them.
The financial side of the agreement - the key to the current dispute - means that prize money is abolished and replaced by a new system of dividing up the TV income.
With the new Concorde Agreement the teams are to get 47% of the TV revenue. These are expected to top $100m a year. The FIA gets 30% with Bernie Ecclestone - the TV rights negotiator - getting the remaining 23%. Of the 47% which the teams get, 50% is to be divided between the signatory teams, with the other 50% being divided between all the teams competing with weightings for historical results and for performance.
In effect this means that the three rebel teams will take a big cut in income. According to the FIA they can, if they wish, become signatories to the agreement but only if 80% of the signatories agree to let them. That will involve concessions by the rebels.
Williams, McLaren and Tyrrell claim that the increased income is not enough given the money that Ecclestone is making from the fees to hold races, trackside advertising and hospitality. This, they argue, will soon amount to as much as $300m a year. With total revenue thus being as much as half a billion dollars (with TV rights included) teams think they should be receiving rather more than the $5-10m which their share of TV rights will bring in.