The Weekly Grapevine

To paraphrase the nursery rhyme, there are now five-and-twenty days to the new Concorde. Or not, as now seems highly likely.

The present ten-year tripartite agreement, which had effectively - in all senses of the word - bound together Formula One's role players since late-August 1998, expires on 31 December, and with it all technical, sporting and commercial obligations outlined in its 120-plus pages legally cease to exist.

For the best part of five years, the three primary parties - the sport's governing body, the FIA; the commercial rights' holder, Formula One Management; and the team collective - had attempted to bash a new deal into place, one which plays to their individual interests while satisfying the EU law-makers in Brussels, and have, certainly on the surface, failed dismally in the task of redefining Formula One's future.

But have they? Or could there be another mechanism at play, which spells the end of the very document that is perceived as fundamental to the running of the sport?

The answer to this question lies buried deep within the present covenant's raison d'etre and the circumstances prevailing at the time of its inception, and, for that matter, circumstances prevailing at every point since the first of no less than five Concorde Agreements was signed in 1981.

The mere fact that the present edition came into force not on 1 January 1998, but on 27 August of that year illustrates just how tricky had been its negotiations, which for the first time involved the three parties as outlined, not merely the governing body and the team collective (known then as the Formula One Constructors' Association) as had been the case since the first Concorde was struck 17 years earlier.

The newcomer was, of course, Formula One Management, then owned entirely by former FOCA boss Bernie Ecclestone, whose foresight as team owner of Brabham meant he was a shoo-in when the presidency of the umbrella organisation fell vacant.

Once in the chair he rapidly increased teams' earning powers while controlling the commercial rights of the sport on their behalf. This he did by leasing the media rights to the sport from FOCA - which in turn had acquired them as part of the 1981 Concorde Agreement - in the name of Formula One Promotions and Administration until the end of 1997.

From there it was a short step to persuading the FIA, now headed by long-time associate Max Mosley, to bypass FOCA and lease him the commercial rights to the sport (for around $300m in a 13-year deal eventually extended by a century after intervention by Brussels' bureaucrats) directly.

In order to get the entrepreneurial team owners onside, Ecclestone struck individual agreements with Tyrrell, McLaren and Williams, who were all holding out for better deals - both as a matter of principle and on financial grounds.

Their submission was eventually bought in August 1998, and the present CA, which effectively splits the sport's revenues on a 77:23 basis between FOM and (up to) 10 teams, came into effect on the 27th of that month.

Formula One's landscape has, however, changed drastically since that date, hence the continuous squabbling between the parties.

For starters, in 1998 there existed not, apart from Ferrari, a manufacturer-owned team. Yes, Mercedes, Ford and Peugeot enjoyed presence as engine suppliers, as did Honda via Mugen, but that was the extent of it.

Reigning constructors' champions Williams, for example, ran on second-hand Renault units badged 'Mecachrome', while at the other end of the scale the eponymous Tyrrell and Minardi teams were powered by heavy Cosworth units sporting Ford ovals on their cast tappet covers.

The most prolific (in volume terms) motor manufacturer on the grid was Peugeot, and the company scored precisely one point in its short-lived partnership with Alain Prost.

Ferrari had won a total of ten Grands Prix in the previous five years; narrow-tracked cars running on grooved tyres had yet to race. Suspicion surrounded imbibers of a funny Austrian drink said to contain aphrodisiacal powers, F1 was of no more than a passing interest to banks, and Bernie Ecclestone earned just '£29m' the previous year.

Then came the manufacturers, and the face of the sport changed forever. No sooner in that they flexed their muscles, and when it became apparent that Ecclestone was heading for multi-billionaire status on the back of their efforts, their marketing programmes, all hell broke loose.

There was no chance that Concorde could be extended while the likes of BMW, Ford, Fiat, Honda, Renault, Mercedes and Toyota were involved, certainly not as the agreement then stood. They threatened a breakaway series.

In January 2005 Ecclestone pulled a masterstroke: aware that Ferrari was haemorrhaging badly as a result of operating to dollar-based contracts while facing Euro-linked expenses, he advanced the red team $100m USD if they sided with him. Within months the likes of Jordan/Midland, Red Bull/Toro Rosso and Williams followed suit, but at a reduced level of remuneration.

Simultaneously the FIA was experiencing increasing difficulty in regulating the sport.

Concorde called for unanimous agreement on changes, and if items on the FIA agenda did not for whatever reason suit the manufacturers, acting under the Grand Prix World Championship banner (which mutated several times over the organisation's five year lifespan), they threatened to vote with their feet.

It was, of course, manna for the media, with the politics and polemics being reported more vigorously than whatever track action there was.

Obviously it could not last, and Mosley put a stop to it by opening a window on 24 March 2006 and bolting it closed seven days later. Whoever entered the 2008 championship and satisfied the FIA's entry requirements would have a say in the framing of the 2008-2012 regulations; whoever was out in the cold after that date, remained forever frozen.

Needless to say the eleven teams plus one (Prodrive) scrambled to sign up, in the process agreeing to a clause stating that 'the team accepts the regulations as published'. In addition, they accepted major changes to Formula One's modus operandi through the addition of an Appendix 5 to the regulations, inter alia:

The establishment of a Sporting Work Group (SWG), and

The establishment of a Technical Working Group (TWG), and

A change to the working of the Formula One Commission (F1C), in that it would be made up of 13 individuals, comprising an FIA representative (likely Mosley), a FOM representative (likely Ecclestone), six team principals, plus five race promoters. The FIA representative would not have a direct vote, but would exercise a casting vote in the event of deadlock, and

All rule changes require majority vote, but - and here comes the rider - the World Motor Sport Council regardless of any majority vote as may have been passed, has powers of veto over any decisions taken by either the SWG and/or TWG.

Thus the FIA fundamentally has the power, if items are considered to be contrary to the best interests of the formula, the championship or motorsport in general, to overrule the SWG, TWG and F1C.

Plus, if that does not work, the FIA still holds its old ace - safety - which entitles the FIA to reject and/or modify regulations on the grounds of this critical aspect. The FIA, however, gets to decide exactly what constitutes 'safe'.

Thus, in one easy move the FIA reshuffled the deck and did away with the need for unanimous decisions for rule changes (as per CA), thus providing itself with, in effect, utter control over the regulatory process.

Put differently, the FIA wrote the requirement for a tripartite agreement right out of the regulations through some of the shrewdest governance yet seen in the sporting world - despite the opposition comprising a dozen of the most competitive corporate managers on earth.

What is more, all 12 teams signified their total acceptance thereof while agreeing to compete in all rounds of the 2008 championship well over a year in advance of the effective date.

Tellingly, though, these regulations specifically permit 'customer cars'; whether that provision is sufficient to save Prodrive's project - for, which, according to confirmation received from the nascent team, the requisite entry fee of US$300,000 was paid by 1 November - is another matter entirely.

Against that background the FIA has no need for a revised CA (in any shape or form), for such a document would serve only to dilute its hard-earned sporting and technical powers, powers the body has always insisted are vested within it - for it, and it alone, owns the Formula One World Championship.

In August 2006 Mosley and Professor Burkhard Goeschel - formerly the BMW director responsible for development and now Chairman of the Formula One Manufacturers Advisory Committee, nee GPMA - struck a deal that saw the manufacturer teams fundamentally accepting the FIA's authority.

That neither Mosley nor Goeschel referred to Concorde in any way during their joint keynote address to the Motorsport Business Forum in Monaco on Wednesday - despite CA-Day being but less than a month way - indicates that the matter is set in stone.

Thus, with the sporting and technical process sorted, and with the century-long, EU-approved commercial rights' lease agreement between the FIA and FOM firmly in place, there remains only one of the outgoing CA's three elements outstanding.

This was a commercial agreement between FOM and the teams, one in which the FIA, by the nature of the agreement (plus decree from Brussels), has no need to participate, for it leased out the commercial rights.

Almost two months after the FIA had retaken control of sporting and technical matters, and coincidentally during the weekend of the maiden SWG meeting (which culminated in victory for the FIA), the GPMA - as the GPWC had in the interim become - charged Alain Dassas, Renault Sport's newly-appointed bean-counting president, with negotiating with Donald McKenzie.

McKenzie was head of CVC Partners, which bought a controlling interest in FOM from three banks, who in turn inherited their holdings when Kirch Media was forced into liquidation after over-extending itself when purchasing the paper rights to F1 from the naive Haffa brothers.

The Haffas, in a moment of blind optimism, had hoped to fund a majority share via the proceeds from their rights to The Muppets.

Where GPMA had held out for 80 percent, dropping to 60 percent, of F1's 2008-2012 revenues - made up mainly by promoter fees, electronic media rights, and hospitality and merchandising income - Ecclestone tabled 50 percent and demanded the motor manufacturers guarantee their teams' participation until 2012.

F1 virgins McKenzie and Dassas agreed on 50 percent, crucially backdated to 2006, with the guarantees clause dropping away.

Under this deal teams could look forward to an effective doubling of FOM income; more, the premium paid to Ferrari, who stood to earn US$120m in a championship year in place of $60m, would be paid by FOM and not the teams, as had been the case.

Even a back-gridding outfit could look forward to $30m (in place of $15m). There were smiles all round - with Ecclestone reserving the right to the biggest mouthful of molars.

At the time a signed agreement was thought vital to CVC's funding of its purchase, for the capital venture company intended borrowing funds to pay the banks and Bernie.

Thus, a Memorandum of Understanding (MoU) was signed between the parties in May 2006 - and there the matter lies. CVC are now in no hurry to progress the matter, for the Royal Bank of Scotland fell over itself to advance the funds.

Tellingly, though, the MoU is thought not to contain a clause permitting (or committing to pay) teams running customer cars, despite this being a matter with massive commercial ramifications.

Either way, as long as no signed agreement exists, no demands can be made upon FOM to pay the backdated payments.

As long as no signed agreement exists, FOM can theoretically roll over the existing terms with the teams having no recourse, for they cannot refuse to race - all 12 agreed unconditionally to participate in the 2008 FIA Formula One World Championship, and stand to be in breach of the regulations should they not do so.

Until (unless) the teams push FOM to convert the MoU into a binding contract, there will be little, if any, movement on that front. Why should there be - just as the FIA holds the sporting and technical aces, so FOM holds the commercial upper hand, and thus has no need to convert the MoU into a signed agreement, much less voluntarily push for a revenue-reducing extension to the Concorde Agreement.

As matters stand now, at best FOM pays them 23 percent; at worst they get 50 percent of present revenues with no backdating until the MoU is converted. (And, likely, no interest on the backlog, which in itself must be a rather tidy sum.)

The teams, therefore, need to make a united effort to twist Bernie's arm to sign an agreement, and when have 12 teams (or is it 11?) acted in unison?

Will they do so before 31 December or even before the season opener in Melbourne in mid-March? Will a clause to permit (and pay revenues) customer cars be included in any such agreement as may be eventually accepted by all parties? Time will tell, but it's unlikely for the foreseeable future.

Concorde, which was, forget not, originally formulated by the Mosley-Ecclestone double-act when they were on the 'other side', has served the sport exceedingly well for over 20 years, but only because it was convenient for the sport's brokers to permit it to do so.

However, as can be seen from the foregoing, that is no longer the case, and Concorde therefore is, certainly as a tripartite agreement, to all intents and purposes dead, ready for burial in five-and-twenty days' time.

We want to hear from you!

Let us know what you would like to see from us in the future.

Take our survey

- The Autosport.com Team

Read and post comments