The hidden discord of F1's new Concorde

As a piece of PR, the press release circulated by the FIA during last Friday's World Motor Sport Council session in Dubrovnik was worth its weight in gold, both politically and commercially: as an over-arching roadmap providing a future direction for Formula 1 for the next eight years through to 2020, the value of its (electronic) paper by far exceeded its substance.

Consider the opening paragraph: The agreement reached by the FIA and the Formula 1 Group in July 2013, setting out the framework for implementation of the Concorde Agreement for the period 2013 - 2020, has now come into force, following the approval of the respective governing bodies of the signatory parties.

Note that the agreement of teams to what was traditionally an all-inclusive covenant - as per every Concorde since that historic 1981 agreement entered into between teams and the governing body - is totally conspicuous by its absence.

In fact, they are not even mentioned in the statement, achieving cameo status only in a later release circulated that day.

According to sources, the teams were not even aware that an agreement purporting to include them was even due to be signed. All they knew was that a pre-agreement to have an agreement at some non-agreed point in future had been signed between FIA President Jean Todt and Formula One Group (FOG) CEO Bernie Ecclestone during the Hungarian Grand Prix weekend, and even here details were scant.

Ecclestone and Todt signed a pre-agreement during the Hungarian GP weekend © XPB

So you have to question the value of an agreement that effectively excludes the sport's major players - in real terms the teams, not the governing body or the commercial rights holder are the stars of the show - from the overall process, whether by design or not.

In fact, early this year Ecclestone emphatically stated that he saw no need for a Concorde, implying that he didn't care either way whether one was signed or not. This pretty much sums up his sentiments towards the teams, who are his major suppliers with whom he holds bilateral commercial agreements.

That alone should indicate that the document that was signed is not a Concorde Agreement in the accepted sense, for Concorde always was a document of two halves: a table detailing the precise split of the teams' shares of F1's billion-dollar underlying revenues; and a regulatory structure, one which provided for all teams to be included in the process.

The commercial side was sorted by way of agreements between FOG and 10 of the 11 teams (Marussia so far being excluded, although an offer has been made) after Ecclestone picked off the Big Four teams one by one, before making take-it-or-leave-it offers to the rest. But the regulatory aspects of the sport were left in a mess, with only goodwill among teams and governing body averting total chaos.

What, then, was formalised on Friday in Croatia?

In real terms, nothing other than a commercial and outline regulatory framework, which permits FOG to trumpet the continuation of official world championship status for an FIA-owned but FOG-managed (for the next century in terms of an arcane deal entered into by the previous FIA presidency) series, regulated by the FIA in return for a healthy fee, believed to be in excess of £120m over the next eight years.

Tellingly, the F1 team bosses have yet to enjoy sight of this much-vaunted document, despite the fact that a subsequent media release, distributed by the FIA's media department after conclusion of the WMSC meeting, states: "The parties have agreed a strong and stable sporting governance framework which includes the Formula 1 Group, the FIA and participating teams."

In fact, said one: "I wish someone would or could tell us what was signed because we don't actually know..."

Mosley's commercial rights deal short-changed the FIA © XPB

Whatever, the deal is crucial for both signatories, and its timing even more so: on one hand the FIA found itself exposed on two counts, being left not only severely cash-strapped by the Max Mosley-era commercial-rights deal, but compromised by a lack of clearly-cut governance after the 2010-12 Concorde expired; on the other, investment fund CVC Capital Partners, majority owner of FOG after a series of complex deals, plans to cash-out, and desperately needs the integrity and stability provided by official sanction prior to going to market.

In addition, CVC is vulnerable through over-reliance on 82-year-old Ecclestone, with whom Mosley had struck the original deal that leased F1's commercial rights to his friend of 30 years for less than one per cent of their intrinsic value over the 113-year term.

Not only will age eventually takes its toll on the F1 tsar, but he faces grave legal battles on both sides of the Atlantic with, saliently, billions being at stake.

None of this, though, answers the root question. The answer lies in internal FIA documents seen by this column, which subsequent to Friday's signing refer to the agreement as the 2013 Concorde Implementation Agreement. That single word makes a world of difference.

Over the years 'Concorde' - derived not only from the bilingual Anglo-French term for 'agreement' but also referring to its place of original signing in 1981, namely the Place de la Concorde, the Paris address of the governing body - became synonymous with stability in the sport. While there have been squabbles aplenty about the agreement's contents, their clauses have not (yet) been tested in a court of law.

Thus, appending 'Concorde' to what is primarily a commercial arrangement between the governing body and the commercial-rights holder endows CVC's stock offering with perceived credibility, while thwarting awkward questions about Ecclestone and reducing the fund's dependence on the octogenarian.

Equally it provides FIA president Jean Todt, who faces stern opposition from at least one quarter - likely two - during December's presidential elections, with vital voter fodder, for he can (rightfully) claim to having saved the FIA from financial ruin.

With elections looming, Todt can claim to have saved the FIA from ruin © XPB

Indeed, no sooner had the first release headed 'Concorde Agreement' hit intrays than another followed, this time from presidential candidate David Ward, who first hit the FIA radar when he lobbied a sceptical EU to approve the said Mosley/Ecclestone contract.

The former Mosleyite welcomed the new deal before questioning how Todt intends spending its windfall, calling on him to "explain how he will use the new funds now available to the FIA."

Ironically, had Ward been less successful in Brussels, there would have been little or no need for the newfangled Concorde...

Todt, though, had Ward's politicking covered: he had proposed the formation of a task force to recommend allocation of such monies (for the FIA and its membership) after the elections. The motion was carried.

Where, though, does this leave the teams? In effect Ecclestone holds power-of-attorney over their signatures, although the teams have pushed for greater input into the regulatory process, with success too: where initial negotiations centred around a restructuring of the Formula 1 Commission as a Strategy Group to the exclusion of half the teams (plus team-friendly sponsors and suppliers), Todt ensured that the Commission and Strategy Group will co-exist.

But things are still not clear-cut, for where the original procedure called for the Sporting and Technical Working Groups (solely comprising team representatives convened under a non-voting FIA chairman) to formulate and approve regulations, then escalate these to the F1 Commission before ratification by the WMSC, the revised structure has the Groups acting in advisory capacities only, with the Strategy Group taking precedence.

Even so, where the teams held total sway in the SWG/TWG, they have but six votes out of 18 on the Strategy Group, made up of the four Constructors Championship Bonus teams - namely Red Bull Racing, Ferrari, McLaren and Mercedes - plus Williams and the best-placed team in the constructors' championship outside this quintet.

FOG and FIA also have six votes each, and given the teams' historic inability to agree it does not require much imagination to predict the outcome of votes.

Teams' collective bargaining power has diminished in the new structure © XPB

So where teams previously played a vital role in the process, having up to 70 per cent of the vote on sporting and technical matters, they now have one third - provided the sextet unites to form a cohesive block and vote unanimously. Todt and Ecclestone know the chances of six teams agreeing on anything are the square root of zero...

Where Concorde initially referred to a bilateral arrangement between teams and governing body defining ownership of television rights and revenue distribution, before mutating into an all-encompassing tripartite agreement between FIA, FOG and teams covering finances and governance, the historic term is now taken to refer to what is in real terms a cosy commercial deal between FIA and FOG - with a revised governance bolted onto the back that fundamentally excludes the sport's largest player group.

For that the teams have only themselves to blame, after they, in their greed, allowed Ecclestone to pick them off one by one.