Concorde Agreement
Encyclopedia
The Concorde Agreement is a contract between the Fédération Internationale de l'Automobile
Fédération Internationale de l'Automobile
The Fédération Internationale de l'Automobile is a non-profit association established as the Association Internationale des Automobile Clubs Reconnus on 20 June 1904 to represent the interests of motoring organisations and motor car users...

 (FIA), the Formula One
Formula One
Formula One, also known as Formula 1 or F1 and referred to officially as the FIA Formula One World Championship, is the highest class of single seater auto racing sanctioned by the Fédération Internationale de l'Automobile . The "formula" designation in the name refers to a set of rules with which...

 teams (currently represented by the Formula One Teams Association
Formula One Teams Association
The Formula One Teams Association is a group of Formula One teams that was formed at a meeting in Maranello on 29 July 2008. This organisation gives the teams a united voice in their ongoing discussions with the FIA and The Formula One Group regarding the future of Formula One. It is headed by...

 (FOTA)) and the Formula One Administration which dictates the terms by which the teams compete in races and take their share of the television revenues and prize money. There have in fact been six separate Concorde Agreements, all of whose terms were kept strictly secret: The first in 1981, others in 1987, 1992, 1997, and 1998, and the current agreement in 2009. However, the secrecy was broken by noted racing journalist Forrest Bond when the 120+ page 1997 Concorde Agreement was published at the end of 2005 by RaceFax.

The effect of the agreements is to encourage professionalism and to increase the commercial success of Formula One. The most important factor in achieving this was the obligation of the teams to participate in every race, hence making the sport more reliable for broadcasters who were expected to invest heavily to acquire television broadcast rights. In return the teams were guaranteed a percentage of the sport's commercial revenue.

First Concorde Agreement (1981)

In 1979, the Commission Sportive Internationale, an organization subordinate to the FIA which was at that time the rule-making body for Formula One, was dissolved and replaced by the Fédération Internationale du Sport Automobile
Fédération Internationale du Sport Automobile
The Fédération Internationale du Sport Automobile was the governing body for motor racing events. The organisation's origins date from 1922, when the Fédération Internationale de l'Automobile delegated the organisation of automobile racing to the CSI , an autonomous committee that would later...

, or FISA
Fédération Internationale du Sport Automobile
The Fédération Internationale du Sport Automobile was the governing body for motor racing events. The organisation's origins date from 1922, when the Fédération Internationale de l'Automobile delegated the organisation of automobile racing to the CSI , an autonomous committee that would later...

, which would serve the same function. FISA clashed repeatedly with the Formula One Constructors Association
Formula One Constructors Association
The Formula One Constructors' Association is an organization of the chassis builders who design and build the cars that race in the FIA Formula One World Championship...

 (FOCA), which represented the teams' interests. FOCA's chief executive at the time was Bernie Ecclestone
Bernie Ecclestone
Bernard Charles "Bernie" Ecclestone is an English business magnate, as president and CEO of Formula One Management and Formula One Administration and through his part-ownership of Alpha Prema, the parent company of the Formula One Group of companies. As such, he is generally considered the primary...

 and his legal advisor was Max Mosley
Max Mosley
Max Rufus Mosley is the former president of the Fédération Internationale de l'Automobile , a non-profit association that represents the interests of motoring organisations and car users worldwide...

, while the president of FISA was Jean Marie Balestre.

The two organizations' disagreements, which came to be known as the FISA-FOCA war
FISA-FOCA war
The FISA–FOCA war was a political battle contested throughout the early 1980s by the two representative organizations in Formula One motor racing, the Fédération Internationale du Sport Automobile and the Formula One Constructors Association...

, resulted in several races being cancelled. Goodyear
Goodyear Tire and Rubber Company
The Goodyear Tire & Rubber Company was founded in 1898 by Frank Seiberling. Goodyear manufactures tires for automobiles, commercial trucks, light trucks, SUVs, race cars, airplanes, farm equipment and heavy earth-mover machinery....

 threatened to withdraw entirely from Formula One, an event which would have been commercially disastrous for the sport, so Ecclestone organized a meeting of team managers, Balestre, and other FISA representatives at the offices of the FIA in the Place de la Concorde
Place de la Concorde
The Place de la Concorde in area, it is the largest square in the French capital. It is located in the city's eighth arrondissement, at the eastern end of the Champs-Élysées.- History :...

, Paris
Paris
Paris is the capital and largest city in France, situated on the river Seine, in northern France, at the heart of the Île-de-France region...

, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

. On January 19, 1981, after thirteen straight hours of negotiation, all parties present signed the first Concorde Agreement, named after the plaza in Paris where the discussions took place.

The contract's terms remain largely confidential, though its known stipulations required the signatory teams to appear and compete in every race and guaranteed their right to do so in order to assure the sport's newly-acquired television public that they would have a race to watch. Also, perhaps most importantly, the agreement granted FOCA the right to televise Formula One races — this right was "leased" to Formula One Promotions and Administration, a company established and owned by Bernie Ecclestone
Bernie Ecclestone
Bernard Charles "Bernie" Ecclestone is an English business magnate, as president and CEO of Formula One Management and Formula One Administration and through his part-ownership of Alpha Prema, the parent company of the Formula One Group of companies. As such, he is generally considered the primary...

. Another important element was the stability in rules, described as protecting the teams from "the whims of the governing body".

It expired on 31 December 1987.

Second Concorde Agreement (1987)

The second Concorde Agreement governed the to seasons inclusive.

Third Concorde Agreement (1992)

The third Concorde Agreement covered the to seasons.

Fourth Concorde Agreement (1997)

In 1995 the FIA decided to transfer Formula One's commercial rights from FOCA to Formula One Administration for a 14-year period. In exchange, Ecclestone would provide an annual payment. McLaren, Williams
WilliamsF1
Williams Grand Prix Engineering Limited, trading as AT&T Williams, is a British Formula One motor racing team and constructor. It was founded and run by Sir Frank Williams and Patrick Head...

 and Tyrrell
Tyrrell Racing
The Tyrrell Racing Organisation was an auto racing team and Formula One constructor founded by Ken Tyrrell which started racing in 1958 and started building its own cars in 1970. The team experienced its greatest success in the early 1970s, when it won three drivers' championships and one...

, protested by rejecting the proposed Concorde Agreement (negotiations for which started as early as 1993). Ken Tyrrell
Ken Tyrrell
Robert Kenneth "Ken" Tyrrell was a British Formula Two racing driver and the founder of the Tyrrell Formula One constructor.-Biography:...

 in particular was enraged by the fact that Ecclestone, as President of FOCA had negotiated the transfer of the rights from the organization to his own company. Tyrrell also objected to the addendum to the Agreement being secret, arguing that secrecy surrounding the agreement benefited only Ecclestone (by weakening the bargaining power of the other parties).

The three teams refused to sign the proposed Concorde Agreement, initially with the support of the remaining teams. However on September 5, 1996 the new Concorde Agreement was signed by all the teams except McLaren, Williams and Tyrrell. The agreement was to run from January 1, 1997 to 2002.

Fifth Concorde Agreement (1998)

By taking a stand against the actions of Bernie Ecclestone
Bernie Ecclestone
Bernard Charles "Bernie" Ecclestone is an English business magnate, as president and CEO of Formula One Management and Formula One Administration and through his part-ownership of Alpha Prema, the parent company of the Formula One Group of companies. As such, he is generally considered the primary...

, the FIA and the wider commercial aspects of Formula One, McLaren, Williams and Tyrrell lost both influence in the sport and income which they would have received as signatories. A compromise was reached and on August 27, 1998, the 1998 Concorde Agreement was signed which accommodated the three teams and which expired on December 31, 2007.

Sixth Concorde Agreement (2009)

On 7 December 2004, at a meeting attended by the bosses of all the teams but Ferrari
Scuderia Ferrari
Scuderia Ferrari is the racing team division of the Ferrari automobile marque. The team currently only races in Formula One but has competed in numerous classes of motorsport since its formation in 1929, including sportscar racing....

, Ecclestone offered a payout of £260,000,000 over three years in return for unanimous renewal of the Concorde Agreement, which would guarantee the continuation of Formula One in its present form at least until the expiration of that contract.

On 19 January, Ferrari
Scuderia Ferrari
Scuderia Ferrari is the racing team division of the Ferrari automobile marque. The team currently only races in Formula One but has competed in numerous classes of motorsport since its formation in 1929, including sportscar racing....

 announced that it had signed an extension to the 1997 Agreement to expire on 31 December 2012. Later in 2005, Red Bull
Red Bull Racing
Red Bull Racing is a Formula One racing team based in Milton Keynes, England which currently holds an Austrian licence. It is, along with Scuderia Toro Rosso, one of two teams owned by beverage company Red Bull GmbH. The team have won two Constructors' Championship titles, in and , becoming the...

 and Jordan
Jordan Grand Prix
Jordan Grand Prix was a Formula One constructor that competed from 1991 to 2005. The team is named after Irish businessman and founder Eddie Jordan...

/Midland also signed an extension. On the 7 December 2005, Williams F1 became the fourth team to sign an extension to the agreement.

On 27 March 2006, the five Grand Prix Manufacturers Association
Grand Prix Manufacturers Association
The Grand Prix Manufacturers Association was an alliance of car manufacturers that participated in Formula One formed to act as a tool to assist the companies in bargaining with Bernie Ecclestone for an agreeable extension to the 1997 Concorde Agreement, the contract by whose terms the teams...

-backed teams submitted their applications for the 2008 season. On 14 May 2006, the five GPMA-backed teams signed a Memorandum of Understanding
Memorandum of understanding
A memorandum of understanding is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in...

 with the commercial rightsholders (CVC/Ecclestone) which formed the basis of the next Concorde Agreement. As such, a full Concorde Agreement was not in place for the season, with the Memorandum and other individual teams acting as a stop-gap solution.

On 29 July 2008, the ten currently competing teams created the Formula One Teams Association
Formula One Teams Association
The Formula One Teams Association is a group of Formula One teams that was formed at a meeting in Maranello on 29 July 2008. This organisation gives the teams a united voice in their ongoing discussions with the FIA and The Formula One Group regarding the future of Formula One. It is headed by...

 (FOTA) to negotiate the terms of contract. After a dispute
FIA–FOTA dispute
The FIA–FOTA dispute was a series of ongoing political clashes between the Fédération Internationale de l'Automobile and Formula One Teams Association over proposed changes to the rules and regulations for the 2010 Formula One season...

 between FOTA and the FIA in the first half of 2009, a new Concorde Agreement was signed by Mosley and all of the teams except BMW Sauber
BMW Sauber
BMW has been involved in Formula One in a number of capacities since the inauguration of the World Drivers' Championship in . The company entered occasional races in the 1950s and 1960s , before building the BMW M12/13 inline-four turbocharged engine in the 1980s...

, which had announced its intention of withdrawing from the sport at the end of the season shortly beforehand. The new agreement provides for a continuation of the terms of the 1998 agreement, and runs until December 31, 2012. At the same meeting of the FIA World Motor Sport Council
FIA World Motor Sport Council
The World Motor Sport Council is the most powerful body of the Fédération Internationale de l'Automobile . It decides on rules and regulations for the FIA's various racing series, from karting to Formula One. Its membership is chosen by the FIA General Assembly, which contains representatives from...

, a programme of resource restriction was also agreed upon, as were a revised set of sporting and technical regulations for the season.

Seventh Concorde Agreement (2013)

The terms of a new agreement to replace the 2009 agreement are currently under negotiation between the FIA and FOM.
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