About the 2013 Concord Agreement

[JohnsonsEvilTwin]

I am trying to picture the F1 without manufacturers involvement. it doesnt look nice to be honest. I think many wont agree here with me but, who here thinks, HRT, Virgin racing and Fake Lotus are doing any good to F1? is F1 better now then it has been when Toyota, BMW and Honda were around?

This is a very good pount mobster, the new teams were of course the making of MrM and have so far been a joke, let alone the fourth one which we by the grace of the Good Lord don't have to behold on a race-track. Imagine a field filled with that kind mixed up with the odd Mercedes, McLaren and Ferrari?

Formula one has certainly been devaluated itself considerasbly only since last year, oh I wonder why.

Very definitely agree with you.

A Williams beating a Sauber is not the same as a Mercedes beating a Ferrari.
Manufacturers give the sport gravitas. Independants add romanticism. If all the manufacturers pulled the plug, F1 would be meaningless for me.

[WhiteBlue]

1) Teams getting money - why do people think they deserve more (25% of the vote at the time of writing)? The teams job is to attract sponsorship and fund their activities from that. If they need to have more from the rights fund then put up the prize money.

I think it is largely the obscene profit margin of 77% which attracts all kind of greediness. The teams were once in business with FOM and used to take the biggest part of that profit in absolute money terms before Bernie managed to increase the business beyond anything anybody could imagine thirty years ago. So the teams over the years always got more money in absolute terms but expressed in percentage of profits they lost big time. They started to catch up again with the expiring concord agreement in 2007. At that time their bargaining position had been deadly compromised by Ferrari doing a separate deal with Bernie which continues to have an impact until the end of 2012. So the teams and some fans think that they legitimately should receive more than 50% of the net profit.

I agree with those who would make a point for the ten top teams to be restricted to the 50% profit share they have now. I would also find 20% profit for the equity holders reasonable. It is the residual 30% which now goes to the banks and which all parties are fighting for.

I agree with the majority of the board that a big part of that money should go towards making F1 tickets more affordable. This means that some traditional GP promoters with history and high spectator numbers should receive lower race fees compared to the average race fee and should be obliged to pass those subsidies back on the race ticket price.

I also think that the lower part of the grid - P11 to P13 in the championship - should receive some money which they did not get in the past. We now have a huge fly away calendar which did not exist in the past and at least all participating teams should receive free transport to the races and start money to cover the expenses of a moderate race team with all consumable costs.

I would also make a point that the FiA should receive some money which should strictly be ear marked for the development of motor sport in countries that are much behind and need to develop their infra structure. So it should not go to countries like Germany or the UK but to Korea, India, Brazil, China, Russia or other countries where motor sport is not so affordable for young drivers.

[WhiteBlue]

There is an entertaining interview with F1 commercial boss Bernie Ecclestone on his own F1.com site today.
It’s a wide ranging discussion, the occasion being his 80th birthday next Thursday (28th October). It’s quite autobiographical, revealing some interesting details, such as his luck as a child not to be killed when a German warplane crashed near him, blowing him 20 metres, but leaving him unscathed. The discussion keeps coming back to the subject of luck, Ecclestone insisting that he was very lucky in his life to have been presented with many great opportunities – he just had the wisdom and foresight to take them, or as he puts it, “It’s the right time and the right place and having the guts to take up the opportunity.”
He is a man who gets things done and is frustrated by people who cannot.
Most of us who work in F1 are fascinated by Ecclestone, how he has managed over such a long period of time to build the scale and reach of the sport via TV and via pushing the sport into new territories, the recent Russian and Indian deals being a case in point. People outside the sport are equally fascinated. A banker I spoke to once, while researching an article, said that if he had been born 200 years ago he would have been a Duke.
I hadn’t realised, until I spoke to Renault F1 team owner and internet entrepreneur Gerard Lopez recently, the extent to which Ecclestone is still always listening to and learning new ideas, in this case Lopez’s suggestions about getting F1 onto mobile phones in Africa.
The interviewer positions Ecclestone as the man who created F1. Increasingly Ferrari are positioning themselves as the backbone of the sport, the ones who created the history (along with McLaren and Williams) and have provided the continuity.
The discussion ends with some coded references to the negotiations over the next Concorde Agreement, due to start in 2013, which are now stepping up in seriousness. Speaking about the 12 team principals, who are sitting across the table from him, he says
“They should probably all see that they run their own businesses properly and not worry about others’. What is good for Formula One is good for everybody involved – teams and companies. Too many people only think about what is good for them. It’s the same with the rules – they only think about what can make them win.”
It is going to be very interesting to see how this negotiation goes. The teams want a larger share of the commercial revenues than the 50% they currently receive. In the past Ecclestone and Max Mosley (in his capacity as FIA president) prevailed because they were able to split Ferrari away from the rest and whoever has Ferrari has the sport. Ferrari ended up with a $100 million windfall and a right of veto over rules.
Last summer in the stand off with Mosley over the budget cap, Ferrari invoked this veto and stood firm with FOTA to the bitter end. Will they stay the course this time or jump ship as they did in the negotiations of 2005? Will FOTA stay together or crumble?
That is a question worth potentially hundreds of millions of dollars.

I think that Jean Todt's FiA is not as strong as Mosley's ever was. It rests to be seen if he can push his fuel efficiency plans through. At the moment it looks like things are completely out of control for him.

I see Ferrari loosing their iconic role more and more as new powers like Mateschitz's Red Bull are building up a new role model for sporting and commercial success in F1.

Bernie has a lot less influence with the current set up of FOTA and I expect him to loose a lot of CVC's margin to the teams. In the end all he wants is making money for the company and he doesn't care so much where the profits end up. Perhaps he will keep them restricted to the percentage pay out they have now and start paying them option bonusses in shares in the future. It would be a clever move IMO.

[WhiteBlue]

Ferrari revive break away threat.

With the core issue about the formula for 2013-2017 settled the players now turn to the thorny issue of money for the next five year period. Some voices think it is pathetic to consider a break away, like Bernie's lap dog at pitpass.

If anything has been shown by the past it is the power of the teams when they are united. They beat the manufacturers and FISA in the early eighties and they captured back the air superiority over the rule book in summer 2009. Since June 2009 FiA an FOTA have been united and have never given FOM an opportunity to split them. They can leverage F1 away from Bernie and CVC if they want it bad enough. The FiA will supervise an alternative series with another name if the teams split away from Bernie. CVC's 100 year contract has no meaning if Bernie has no cars to fill the F1 grid and all the teams and drivers run in a different series. Contrary to 2009 there are no teams that have any binding agreements with the FiA or FOM beyond 2012.

The old bugger is in for a hard ride IMO.

As allways Joe Saward is worth reading on political issues.

He thinks that F1 can switch the owner and have a sugar daddy with Abu Dhabi. It is all nice and optimistic to believe that Abu Dhabi with endless oil money will bail F1 out from the private equity capital and accept 15% where CVC took 50%. It would be wonderful but how realistic is that? I will believe it when I see it.

[wesley123]

Well it isnt quite unlikely to see it happen and I can (for the first time in my life) somwhat agree with Di Montezemelo. It is simply ridiculous to see almost any part that is different from 'what is ment' is banned due to or stupid safety rules or another way that is even more ridiculous.

Banning these parts on safety is stupid, colliding with 400kph onto an concrete wall wouldnt kill you, in the worst case you broke your leg and that's all, why then ban such devices on safety? These cars dont even reach 400kph, matter of fact they dont even come close. The W01 roll hoop is something I can imagine, and the F-Duct also(make it knee operated), but an shark fin or an full blown slot? that is ridiculous.

[donskar]

WhiteBlue wrote:

I see Ferrari loosing their iconic role more and more as new powers like Mateschitz's Red Bull are building up a new role model for sporting and commercial success in F1.

You "see" or hope? No offense meant, but for RedBull, racing is a marketing tool. Should the business cycle reduce RedBull's profits, they will reduce or eliminate their presence in F1. If another marketing tool (social media?) prove more cost effective, they will reduce or eliminate their racing budget.

In other words, if racing (and RedBull is involved in MANY forms of racing, on land sea, and air) does not provide sufficient Return on Investment (ROI), RedBull is gone. For Ferrari, racing is their raison d'etre, not a mere marketing tool. Neither you nor I can predict the future, but it is inconceivable that Ferrari would exist and NOT be involved in top level racing. Iconic? I can see a legendary automobile as an icon, but not a tin can.

[WhiteBlue]

WhiteBlue wrote:

I see Ferrari loosing their iconic role more and more as new powers like Mateschitz's Red Bull are building up a new role model for sporting and commercial success in F1.

You "see" or hope? No offense meant, but for RedBull, racing is a marketing tool. Should the business cycle reduce RedBull's profits, they will reduce or eliminate their presence in F1. If another marketing tool (social media?) prove more cost effective, they will reduce or eliminate their racing budget.

In other words, if racing (and RedBull is involved in MANY forms of racing, on land sea, and air) does not provide sufficient Return on Investment (ROI), RedBull is gone. For Ferrari, racing is their raison d'etre, not a mere marketing tool. Neither you nor I can predict the future, but it is inconceivable that Ferrari would exist and NOT be involved in top level racing. Iconic? I can see a legendary automobile as an icon, but not a tin can.

Red Bull has used F1 sponsoring for fifteen years as their main PR vehicle. They have outscored Ferrari in their own game 6:1 in 2010 by getting TV coverage for their brand from F1. They are at the height of success getting return for their F1 investment and it could be getting even better if they commission their own successful engine for 2013. They certainly have the money to do what Ron Dennis did in 1981 and Adrian Newey is capable of guiding a good engine supplier equally competent as John Barnard did it.

I see no reason why F1 can only be used successfully for advertising super expensive sports cars. Red Bull has demonstrated clearly that it works for soft drinks as well. If they build on the 2010 success Ferrari will decline back to the pre Schumacher/Todt/Byrne/Brawn period when they had no championship for 19 years. That is very easy to imagine. The motor racing fans primarily care for the drivers and to some degree for the race car technology but not for the product that is sponsoring the team. Ferrari road cars may be legend but few can afford them while masses of people can by the tin cans Red Bull is flogging ahead by their F1 sponsorship. It is the same business principle probably with even greater margins applied to a mass produced article instead of a niche product. My money would be on Mateschitz to win the game. He is out to compete with Coca Cola and not with Ferrari in his core business. Did you ever check the sales and profit figures of Coke compared to Ferrari?

[Giblet]

If I want to buy a Ferrari, I won't come home with a case of Red Bull instead because Ref Bull f1 won the crown.

During ferrari's winless period they still sold cars. Ferrari has already built their brand and when someone buys one, they usually stick with them and form an allegiance.

A much stronger allegiance as energy drinks are numerous and cheap.

[FW17]

The previous concord agreements did not include many provisions for European Grand Prix other than probably Monaco and Monza. With many of the established European venues in financial trouble (Belgian, France, Germany, spain etc) will there be any initiative taken by some group to protect F1 in its core market area (though a global sport a huge chunk of its popularity is from Europe).

FOTA has taken up the collective interest of the teams to ensure the best terms from FIA and FOM, but should European GP organizers form a union to collectively demand for 10 races a year at a nominal amount and then decide among themselves on alternating the venues over the years? Will such a union have the backing of EU?

[FW17]

BE on a mission and has started playing his tricks to brake up FOTA and peace with FIA

1) wants 10 teams only

2) wants current engine rules to continue by citing Ferrari's unhappiness with I4 specs

3) Targets FIA as he has lost MM

[WhiteBlue]

http://www.sportbusiness.com/news/18340 ... ct-changes

I will make sure that everybody realises that since the (100-year) agreement has been signed and now times have changed, technology has changed. Fifteen years ago you didn't have all the sophisticated electronics you can enjoy today when you watch the TV. All that has a cost. Definitely we need to take that in consideration because I must make sure that the funding for the FIA is correct. Our costs are greater than they were 10 years ago. Evolution has a price. It is important not to overreact. I feel with confrontation, unless it is necessary to achieve a result, you lose time. I prefer to achieve results with harmony rather than confrontation.

It appears that Jean Todt will try to get a bigger slice for the FiA. He can charge it to the teams if he helps them to get the money from CVC. As he also pointed out the FiA has the veto right over the exit of CVC from the F1 investment. If CVC opposes the FiA they could find themselves in a situation where they are locked in a business that is a lot less profitable than it used to be. CVC cannot materialize valuation improvements by selling the business unless the FiA agrees with the deal.

[WhiteBlue]

There is an opinion piece in Pitpass which is considered a very pro Ecclestone web site.

http://www.pitpass.com/fes_php/pitpass_ ... t_id=43400

Exclusive: Mercedes says FOTA rival series is a possibility
16/04/2011

It seems like only yesterday that the Concorde Agreement was signed. However, the current contract which commits the teams to Formula One will expire at the end of next year and the posturing has already begun.

At the end of last year Ferrari president Luca di Montezemolo said there will be a rival series post-2012 if the teams do not receive more than their current 50% share of F1's profits. Recently he revised his opinion and said Ferrari will stay in F1 "so long as the sport gives us back something for the development of technology of our production cars. Otherwise not." One team which is less vague about its options is Mercedes.

On looking through documents filed earlier this month by the Brackley-based team Pitpass' business editor Chris Sylt was surprised to see specific reference to the Formula One Teams Association (FOTA) running its own rival series to F1. The definitions of the terms used in the document state that: "Constructors' Championship" means the Federation Internationale de l'Automobile Formula One World Constructors' Championship (or any alternative or Formula One Teams Association substitute championship of the same or similar calibre).

Clearly there would be no point in Mercedes including this in the definitions if it didn't think that this was a possibility in future. It makes sense that Mercedes hasn't given up hope of this since it was one of the leading lights of the planned Grand Prix World Championship series and then the Grand Prix Manufacturers Association which followed it.

However, to be frank, Mercedes, Ferrari and any other team for that matter, should spare the fans, and their shareholders, the misery and dump any mentions of a rival FOTA series right now because the chance of it taking place is precisely zero.

The teams' previous attempt at a rival series was so laughable that you would have thought they would realise that they will never be treated seriously again about this. Let's not forget the famous FOTA press release of 18 June 2009 which announced that "the major drivers, stars, brands, sponsors, promoters and companies historically associated with the highest level of motorsport will all feature in this new series."

Just six days later FOTA put an end to its plans and agreed to race in F1 from 2010 instead. Two months after that they signed the Concorde Agreement. If the teams really do care about the messages they put out to the public it seems hard to tell on the basis of this sorry episode.

Interestingly, Sylt understands that a clause in the Concorde Agreement prevents the teams from making any public statement or statements in any medium, whether orally or in writing, or in any country, promoting an equivalent championship or series to the FIA F1 championship until after completion of the last race in 2012.

The contract is also understood to prevent teams from making preparations for a rival series, or soliciting broadcasters or circuits for it, until 1 January 2012. One wonders whether some of the teams will be able to contain themselves until then.

I particularly like the bold part because this is 100% pure Ecclestone propaganda. The chance that FOTA will race elsewhere but in an Ecclestone 100 years administered F1 series is very real.

Almost all teams are determined to raise their payout from the FOM coffers to 75% or more. If Bernie over plays his hand he will end up with commercial rights to nothing really relevant and the teams will collaborate with the FiA to have their own series sanctioned. The FiA will and must do it if push comes to shove.

Before that happens it will be very likely that Bernie bribes Ferrari again with extra money unless the deal is already done. I'm not sure that isn't the sad reality already. Ferrari have been making a lot of anti FOTA and pro Ecclestone noises.

[WhiteBlue]

http://scotlandonsunday.scotsman.com/fo ... iclepage=3

Some rubbish in this article particularly the time cited for manufacturer domination but the battle lines for the potential Murdoch take over are nicely explained. Nice closing with an Ecclestone quote.

You can have anything you like, as long as you pay too much for it.

http://joesaward.wordpress.com/2011/05/ ... -for-sale/

Its also useful to consider the fact that some of the parent companies running the FOTA teams now have deep pockets.

The sport is for sale. It is just a question of someone coming up with the right price to send CVC away…

[WhiteBlue]

Joe Saward's blog

The big whisper in the paddock is that there is about to be a big development in the Concorde Agreement negotiations. This can really only mean one thing: that the non-FOTA teams have thrown in their lot with the Formula One group and have done their own deals, rather than trying to get more from collective bargaining. I am hearing that Ferrari and Red Bull have both agreed to be paid a premium, based on their importance to F1. With Ferrari one can understand such a deal. It is the only F1 team that the Formula One group needs to have on its side and in the past it has always done deals that suits Ferrari, rather than what is best for the sport. This is how the team ended up getting 2.5 percent of the entire team prize fund, in addition to the same breakdowns as the other teams. This equates to an annual payment of around $20 million more than the others. Ferrari has the power to negotiate such deals and one has to accept that this is perhaps a better idea than getting into a fight trying to reduce the sums which are ripped out of the sport by the financiers behind the Formula One group.

It makes no real sense for the sport to allow the money to disappear, but as the teams are incapable of either working together or taking control of the commercial rights themselves then they must pay the penalty for their lack of foresight. One cannot blame Ecclestone for trying to get the best deal possible, although one can argue that as a fan of the sport he really ought to be interested in putting something back to help create a bigger audience around the world. He would argue that this is not his job and until someone else gets control of the commercial decision-making that is how it will remain.

Red Bull has none of the historical clout of Ferrari, but it has been winning for the last couple of years, although no-one who has been around F1 for a while believes that the Austrian drinks company will stay forever. F1 is a means to an end, but as money is no object and it is easier to win if you spend more than your opposition, Red Bull has positioned itself so that it can get a better pay-off from the Formula One group.

If the deals have now been done, there will follow the same process as we have seen in the past with an announcement and then the crumbling of the other teams, who have no power without Ferrari. The irony, of course, is that the people who most need the money that F1 generates are the middle-ranking F1 teams who would be much better off if they were getting a share of 85 percent of the F1 revenues, rather than the current figure, which is still less than 50 percent.

It means that a bunch of bankers will once again be able to suck money out of the business and put nothing of any value back in. The next step once the Concorde Agreement is finished will be the sale to a new owner, and/or the launch of another massive loan that will result in F1 remaining a cash cow for the next five to 10 years. Timing is everything, of course, and a key deciding factor in this will probably be Luca di Montezemolo’s desire to get Ferrari sorted out so he can focus on his next challenge, which is to be Italy’s Prime Minister. That programme is now gearing up and so it is the right moment for a deal to be struck.

It should not be much of a coincidence that this is happening at the same time as ten teams ask the FiA to oversee a new budget cap process. Once they know that they are not going to see much more money they will be concerned that Ferrari and Red Bull will profit over proportionally in terms of competitiveness from their bigger share of the income.

[WhiteBlue]

Adam Cooper's Blog, SpeedTV

A website that has been known to be close to Bernie Ecclestone reported this week that we could expect a big announcement soon, and a close aide of the F1 boss confirmed to SPEED in Australia that news was indeed on its way – and that it involved the structure of the sport and would shake a few people up.

Some team insiders speculated that it might involved Ferrari and Red Bull signing up to a new Concorde Agreement, and the UK’s Sky News has now reported something along similar lines with the suggestion that those teams will have a stake in the ownership of the sport via the new 2013-2020 deal.

This would be linked to a public offering of a sale of part of CVC’s stake in F1, which Sky says will be placed by Goldman Sachs and which values the sport at “well over £10bn.” Another recent UK newspaper report suggested that any available shares will be those currently owned by Lehman Brothers, which has a 15.3% stake.

Sky reports that Ferrari as usual has a special position as the oldest team in the sport, and there’s extra cash for the first team to have won consecutive constructors’ titles since 2008, the team in question being Red Bull.

There is also mention of single car customer teams for new entrants.

A Ferrari/RBR deal is certainly logical, and if true the next question has to be what deal did or will those teams get as the first signatories, and what is available to everyone else – the FOTA members, essentially.

Note: Intriguingly the Sky News story, which was a blog by business editor Mark Kleinman, has seemingly now disappeared from the website after being up for only a few hours on Saturday evening UK time. That is perhaps not surprising given that it contained what appeared to be extracts from legal documents that one might assume were not supposed to be in the public domain…

Surprisingly this week Red Bull have come to support the third team customer car plan for the first time, which indicates that Ferrari, Red Bull and Ecclestone have aligned their business interests along the same line. It very much points towards an agreement regarding the big issues like the Concord and team equity in F1.