The Concorde Agreement

There have been some stories in recent days about how some of the top Formula 1 teams may have already signed the Concorde Agreement for 2013 and beyond. This is not very likely, as it makes no sense given the restrictions that exist in the current Concorde Agreement. These are all secret, but my spies tell me that although the Commercial Rights Holder can start discussing new deals with teams after December 31 2011, he is contractually bound to offer the same deal to all the teams in the negotiations, up to the end of the current Concorde Agreement on December 31, 2012. He may agree similar terms as those under the 2009 agreement, which gave Ferrari a big bonus, but he may not otherwise do any deals which provide any rights, benefits or privileges, which would discriminate against the other teams. This is all, apparently, in writing and all parties have agreed to the terms.

The Concorde Agreement appears to be written in such a way as to safeguard the teams against one another, as much as against the commercial rights holder. The only reason that Ferrari or Red Bull would sign an early deal is if they felt that there was something to be gained from doing so. If the Formula One group is willing to offer these teams a significantly better deal than they currently have, they might sign, but if they did, that would commit the Formula One group to pay the same to all the other teams as well. A smart team owner would want to know why such a deal was on offer and would understand that anyone proposing such an arrangement was in a weak negotiating position and would, logically, conclude that it would be wiser to hold off and return to collective bargaining and negotiate better terms, in league with the other teams.

The only real reason why the owners of the Formula One group might offer such deals would be to assure stability for the future, which would enable them to rapidly get into a position where they could sell the business, or raise loans secured on the future revenues of the sport. But it is doubtful that they would want to send out signals of vulnerability at a time when the Formula One Teams’ Association is in danger of falling apart, as this would create a good reason for the teams to get back together again and stop quibbling over what amount to minor points in the overall scheme of things.

31 thoughts on “The Concorde Agreement

  1. I’m always amused by the redundancy in the French/English title “Concorde Agreement”, which translates as “Agreement Agreement” or “Concorde Concorde” if you prefer.

    Isn’t the lack of unity shown by FOTA the right time to sign up Ferrari (no-one really cares about Red Bull the brand in F1, they are only popular now due to their current success). In the same way that the commercial rights holder couldn’t make any offers until after 31/12/2011, weren’t the teams also bound to not threaten any break away series before the same date? Signing Ferrari could simply be a tactic to preclude the break away threat in future.

    1. I always thought it was called that in reference to the FIA address on the Place de la Concorde. But come to think of it, I have no idea why I thought that – so I may have dreamt it!

      1. Itis explained in Susan Watkins’s book about Bernie, but I do not have it to hand and I have forgotten what it says. Basically, if I remember right, concord is an agreement and Jean Marie Balestre wanted an e added to make it sound more French and it was Place de La Concorde and the aeroplane etc etc etc

  2. Is there a simplified version of this to download. I say, simplified, as I’m sure it’s as big as the bible.

          1. What would happen if a ‘spy’ leaked it or it was stolen from someone.

            The Playstation network was hacked last year, I’m guessing the security at HRT can’t be anywhere near as good as Sony, so…… It surely wouldn’t be a suprise if HRT lost a server with it on it while moving or one its employees that left with Kolles accidentally had a copy….

            I guess I’m just a bit suprised it hasn’t found its way onto the web.

            Can The Mole help us out? ….. probably not but…

  3. Joe, if everything regarding the agreement is so secret, how would any particular team know that they were not being given equal treatment to another team? And if they all have to be equal then who ultimately “negotiates” on behalf of all the supposedly equal teams? Seems very easy for the commercial rights holder to scam the teams and claim “confidentiality”, no?

    1. It’s confidential for those not in the know. The teams know what is in it and the teams can find out what other teams sign on to.

      It’s just we can’t know.

  4. Does not preferential treatment . . and then equal offer, hold a contradiction? Unless, the other signatories, implicitly or otherwise, agree to the variation? Or, is it a variation?

    I am thinking Landlord and Tenant law, bit close to my distraction lately, where unilateral variations must be offered to all or be invalid. That is based on severality, rather than anything particular to property.

    Break this down a little, to a partnership. What happens if partners have unequal terms with one another at random? You can have a senior partner, but getting the rest out of synch is, well, an awful idea. Primus Inter Pares, also has practical restrictions.

    But this is the first time I have heard anything like severality hinted at with Concorde. If it applies, then there is no advantage to being first taker for terms. (though you could bluff and blow hard)

    You can, nonetheless, end run financial compensation through the senior party, or another. Just not effectual terms. Money differences are quite normal, people put differing contributions of work or capital in. But at the end of day, the idea must be to have a coherent whole, otherwise, as I understand it, people are free to break.

    If you take the partnership to a logical conclusion – and I really am reaching with this – then there is no partnership if people dissent. The original agreements fail. It starts to break the original form, the mold if you like, which gives the purpose, and to a large extent the legal corporate body. The ultimate logic, is intent and purpose dissolve. Kittens just got herded.

    Or, we might just have a reason why breakaways are so difficult. Because if you construct an argument based on partnership, the others are quite entitled to claim against you for taking your – otherwise expected and agreed – cards from the table. Additionally, unless you construct under say Partnerships 1907, you have no means to time limit the agreement.

    Please don’t take this as a fair attempt to analyse. I may have spent much of my life dealing with partnerships, but I am distracted presently by finding out how ineffectual, well unwieldy, at least mine, can be. Dates, then, become rather conceptual.

    So I think Joe’s point, about safeguarding one team from another, is very good, and to my mind, very likely. I posit the senior partner and dividend explanation as a means to explain what looks like a contradiction.

    Over to more attentive minds. I would like to wryly note, however, as a general observation in life, that complex law only ever gets observed by the most sophisticated. Amateurs and chancers seem to go one of two ways: either observe nothing, or write boiler plate rot which has no meaning. A very rare few, dance freestyle. Like Max M. You don’t do that and act irresponsibly, or the next higher level of sophistication will swat you like a fly.

    1. I think history has clearly show that any partnership involving Bernie needs to be read with a microscope. But then be ready for the other offer which comes unexpectedly, costing more, at the last minute and cannot be refused.
      The man has many faults but he is a bloody genius!

  5. Who starts these kinds of stories (early signings by Sauber, RB & Ferrari)? You have consistently in the past maintained the position stated in your current posting, and it is clear in the perils it creates for CVC.

    I would put some credence to the possibility that Bernie has reached an UNDERSTANDING of the terms of a new deal on offer, but if he has to make the same offer to the balance of the teams, what does he gain?

  6. I think your last paragraph is spot on, Joe. Could it be that CVC is worried about the fallout regarding BE’s ties to the Gribkowski affair? They may want to divest themselves before everything hits the fan, and the perception that their investment may go pear shaped. Any news on the latest from that quarter?

    1. markdartj,

      I personally think someone else is worried. If Bernie is putting his hands up as a bluff, Lord Be, that would be awful for him, unless he has a pact with St. Peter. Or a perfect alibi. Given the usual scale of prosecutions as to these subjects is usually about 7 years, we are left with speculation.

      I have personally chased offshore entities, with good reason, which have hurt me. Some of this will now become public, though I am afraid what that may lay on me. Whilst I should maybe have taken a leaf from that book, my honest action was this: tell my business partner we should do as the Romans do, or fail, and he told me No, No, No, and he was an honest man. My view is this: there is insufficient transparency as to on-shore entities, to start the argument. Law does consider pot calling kettle. Even an appreciation for this, often lays me low. It is an unexplored area of law, to my view, and the reason we have both “who gets away with too much” as well as falsely avaricious prosecution, which on both sides should not be allowed.

  7. It wouldn’t surprise me if Bernie has been having conversations regarding the subject with some of the teams for some time now, getting his ducks in a row. However as you say, there seems to be little incentive to the teams to agree to anything at this point since pushing any signing as late in the year as possible would give them more leverage in the negotiating table and if it doesn’t, mr. E has to match the offers made to the other teams.

    Am I being cynical in thinking that there is bound to be a loophole in the agreement that will allow Bernie to lure some of the big teams into signing with some type of incentive gained over the holdouts as he has done in the past? …I just don’t see Bernie allowing himself to be painted into a corner so easily, he seems much to crafty for that, but then again he is getting a little long in the teeth and just like drivers have an expiration date, so does the mental sharpness of a top negotiator.

  8. Exactly Joe.
    The psuedo-journalism rumour stories of recent days makes NO SENSEin truth to me either – given the conditions for re-negotiation enforced under the F1 Concorde until it ends on 31-Dec-2012.

    Could it be that Bernie/FOM are leaking misleading gossip, just to make those teams still invested in FOTA feel a little more under pressure/uncertainty to capitulate into beakaway from FOTA for themselves? Ultimately, BE/FOM wants FOTA to disintegrate entirely as a Joint-Strike-Force by the time the end of 2012 comes around. BE wants to deal with 12 teams as go-it-aloners.

    Sounds to underhanded and ‘dirty play’ for squeaky clean Bernie doesn’t it? (sarc – cough, gag, LoL). JF

    1. Jack Flash, I hear you. This seems all tick – tock clockwork to me. Which is why Joe is right to call it out. Funny thing, it’s only newsworthy – here – because it has to be called bunk. (very politely, mind, some exercise left to reader!)

      As for the Funny Old Tiddlywinks Association, who knows? They seem to be copying without a hint of honest plagiarism. Okay, novel thought, because I was being same old, same old, what if it suits BE and his lot to actually bust it up? In my far fetched partnership analogy, that might suit a frustrated party. Then they can really go play divide and rule.

      My problem with hypothetical legal imaginations, is being hypothetical, there is always a winning run to be made. But i have seen, am staring at one right now, some real legal situations where all those runs work for one of the players. For the record, circuitous logic only ever upsets me, because I wish life to be more purposeful. What on earth would happen if this energy got used fruitfully? – j

    2. Nah mate, that’s just using the press, something he does all the time. The trick is to know when its true and not just a smokescreen, very few do!

  9. Bernie has always been a past master at laying smokescreens, I don’t suppose that he is any less good at it now as he has been in the past, but events in Germany may be causing him to think rather more long-term than usual.

    Peter

  10. Why don’t they establish ‘Formula Quibble’, a new structured reality tv series, similar in format to The Only Way is Essex, Made in Chelsea, Desperate Scousewives, etc.

    Here, we have camera crews shadow the Formula One teams during the build up to a grand prix weekend. Before the race the tv producers broadcast a carefully edited and entertaining ‘docu-soap’ as foreplay to the main event, complete with discussion and heated debates over DRS, KERS, still or sparkling water…

    Now, at last we see the human face of Formula One, ‘the relationship dynamic’, which as we all know is life’s first certainty after death and taxes.

  11. The key will be how many years the CVC fund that owns F1 has left to run before they are mandated to start disposing of assets.

  12. Have to say it, rpaco, but any partnership involving anyone probably requires a prior checkup at the opticians. Maybe some star jumps, oxygen and brain food diet as well . .

    I holed up the weekend to re-read the juicier bits of Susan Watkins’ book, trying to “read into her mind”, look out for what only a woman’s instinct and a friend might spot. Nothing revelatory, but slowly absorbing a different view. I was struck by one quote, about Bernie when he sat in on FIA business, that he would humor silly ideas as readily as knock down purportedly good ones.

    That had me thinking, as my tolerance for excruciating detail, at least in conversation, is already diminished by age. (and probably now too flippant, too used to working things out by necessity in the wash because people do make assumptions, project, rely on cheap advice) Then I thought, might not be the proposal, but who proposes, and perception of agendas. Look at F1 naively now, and it looks well oiled, professional. But it came up from a lot of chancers and squabblers. Iffy blazers and school ties, also. (though that does just occur to me as just how things were, before spivs danced up the social ladder in a public funded wave, and public school boys perfected their impromptu Cockney and dressed down)

    Consider this as my point: if you are used to the players shooting themselves in the foot, would you accept anything right away? Benefits no-one, that way. Do you actually have a responsibility to care for the fairness or other side? (this is a little grey area now, rather than just caveat emptor, as good faith has been introduced) Still we have teams existing hand to mouth, not knowing what their names are when asked too early in the morning. So, the problem is, how do you protect yourself from a potential fly by night? (and what is the nett value to the sport of a weak and without momentum team?) By writing rock solid golden – handcuff deals, and being banker of last resort?

    Another aspect is what having legal brains plus financial muscle gives as edge. People who have never read law, or just won a scrap are awful resentful towards the application, even self described sophisticated business types. Now, in wielding muscle, there’s a possibly legit potential grievance against Bernie. The question is, what is good argument, and what is muscle, and when is “muscle” the misconception created by inadequate appreciation by the other party?

    But the biggest impression I got from catching up all over, is this Mario Monti “The Euro is just fine, thank you” chap, has a lot to answer for. The competition case dropped off my RADAR when he took over. But I’ll look that up again, boy did he play into Bernie’s hands, if van Miert didn’t queer the pitch before.

    It’s widely taken as given, and good aural claim – if you take them on trust, and I am very much inclined to take what likes of FW say at face value, from the objecting three teams, that Bernie Shanghaied the sport. (which they may have considered “their” sport, by superannuation and success) But what was the Competition Commission on about? Max had a close call with trucks. The Commission insisted a divesting of the rights, suggesting, well, was this then a settlement, for past sins of co-opting media rights? They barely existed before, so “co-opting” them can be argued as buying in cheap. But, and this always gets me, if there was wrongdoing to set right, how is it that a Commission ruling actually benefits the wrong-doers. (Being both FOA and FIA, even if it took a while for FOA to pay the latter.) How instead do you not levy a fine or actual punishment? The purpose of competition law, at least in the theory I understand, is that no party should wield undue influence, even when small, because scale is relative. Von Miert was shrill, grandstanding, causing the Commission problems, stretching it out beyond his elected term. Monti looks like he rolled over. Did they ever once think, that is might be a good idea to employ a actually talented litigator when up against Bernie and Max?

    Now, that is either cockup – I mean Business As Usual in Brussels. Or maybe some very smart back-room dealing. Now which Italian businessman rose very fast since 2001, got a sweetheart deal, and was nice to let another Italian front stage the financial bailout mess? (Though frankly, I’d let someone else go on watch for this Euro travesty.)

    So, sure Bernie benefits. He can sit out a negotiating gridlock. But who else? A few too many with the experience are stepping down lately. Even poses to me, they might have stepped down to go pay full attention to whatever is going on in the back room. I do sometimes wonder why the FIA’s website is on a dot com, not a dot INT.

    1. By coincidence I am currently reading “Bernie’s Game” and am now just up to the appointment of Jean Marie Ballestre. There are many accounts of deals that were either not what people thought or were effectively forced upon them.

  13. patrick,

    oh my, when I read about those programmes, a little part of me died. My head had such a comfortable spot in the sand. You’re so right, enough of it in F1. Formula Fiddle, maybe, at least alliterative. I wonder if we could legally get away with a board game satire? I think they got EJ in to commentate just so everyone else would be so shocked and awed into trying to play it straight. Brundelisms declined, sadly, for one count. I just noticed today, Formula Zero is a FIA safety initiative. Way to cover the bases.

    . . .

    Adrian N Jr,

    but those shares are doled out to funds with different goals. Some prospectuses might turn out handy.

    . . .

    rpaco, just a thought, but I’m not trying to come out as a Bernie lover on this. Just wondering what cacophony he has to put up with. Just because it’s fresh in my mind, but this never came across to me via the newspapers, likely for good editorial reason: what a bunch of awful he had to deal with at Silverstone. When i mentioned tawdry blazers, above, that was my prejudice speaking. But how Susan Watkins puts it, not once saying anything bad, I can just feel a level of female disgust at a disorganized shambles. Might be me. It is just a view, to question. But i would like to posit this: if you look after a business, long term, you loose a lot of selfish attitudes. Caretaker more than opportunist. Which would be a prototypical female strength. Why would Bernie not have adapted that way, no matter he gave little quarter? He always thought long distance. I am stupidly prickly in my own work life, and stupid would be about the right word, when I cannot better disguise I am confused. As a bloke in any game, better to react silly, than to say, “oh, I’m feeling lost”. Funny thing, and I am not claiming self awareness!

    . . .

    sorry to hog the thread. Getting a dot INT designation is intergovernmental treaty stuff. I think when Bernie wanted to float he wanted this off his shoulders a lot more than we may suspect. Teams could have bought in, open market, then. best to all – j

  14. Regarding the Concorde Agreement and the BskyB BBC deal, does anyone know if there is any truth to the rumour that the Concorde Agreement states that F1 will be kept as a free to view entity in the UK? If so does the Agreement with BSkyB and BBC actually infringe and breach the Concorde Agreement? If this is the case why hasn’t other disgruntled parties created a fuss? I have recently contacted sky to raise the issues and they seemed puzzled that I should be upset by the deal. I would like to know who else out there is going to miss out on watching this great sport due to a lack of finance to pay for sky or those that cannot have sky due to landlords refusal to allow dishes etc to be fitted to their buildings.

    I would urge people to sign the e-petition on the direct.gov.uk wesite to help support other fans like me, who simply cannot afford sky….does anyone else feel discriminated against as a result of this I sure do!!!! Anyone who has views on this please contact me or leave comments for me as I intend to do a dissertation to present to BOTH the BBC and BSkyB on the matter, it doesn’t matter if your views support the deal or not as I would like to hear all views.

    Thank you for reading

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