The 1997 Concorde Agreement Bringing Transparency to Formula 1 It is Formula 1’s holy of holies, the secret kept by scores contracts written by lawyers can be. Much of it — like of people for a quarter of a century. It is the contract the driver recognition board agreement, which occupies which binds the F1 teams, the FIA, and the entity, run by 25 of 103 pages — has little utility for those seeking a Bernie Ecclestone, which holds the sport’s commercial deeper understanding of the machinations of Formula 1. rights through 2097. It is the fabled Concorde A much smaller portion — the sections on the Formula Agreement, and now, it is secret no longer. One Commission and the Formula One Technical In truth, we never expected to see the Concorde, even Working Group, for example — is essential to after, as seems likely now, it might pass into history at understanding such things as how Mosley brought forth the end of 2007, to be replaced by a very different the 2005 regulation changes under the guise of safety. contract. But then, on an otherwise unremarkable day These and other sections are also essential to nearly eight years ago, a heavy, nondescript package understanding the dispute between the FIA and the arrived in the post. No return address. No hint at the Grand Prix Manufacturers Assn. contents. To our considerable surprise, opening the A very small portion is fascinating. But on balance, packaged produced three thick, bound documents: the we suspect that, when the reader has finished plowing 1992 Concorde Agreement, the 1994 Variation through it, the reaction will be the same as ours: why Agreement to the 1992 Concorde Agreement, and the did the players feel it necessary to keep this secret? 1997 Concorde Agreement, then the most recent signed Perhaps it was simply to make them feel important, and by the teams, the FIA and Ecclestone. to separate them from us; not much else suggests itself Another, more recent version, presumably, a 1998 as a logical reason. It is interesting, but hardly revelatory. Variation Agreement, was then being debated (see “How As an example, the Concorde spells out the incredibly the Game Is Played,” the second part of an article, complex way prize money for a Grand Prix is distributed, “Following Formula 1’s Money Trail,” published on based largely on positions at various milestone laps November 3rd, 2005, and resident in our archives), but during a race. That’s interesting. What would make it after that was finally agreed, whoever F1’s Deep Throat revelatory is if the amount of the prize money were is, he or she either chose not to provide it to us, or was included, but it is not. So we now know how the gold is unable to do so. It matters not, for FIA president Max divided, but not how much gold. Mosley and various team owners subsequently made (From the 1992 Concorde, however, we do know the public most, if not all of the changes later agreed to the prize fund for 1987 — $915,000 per race — and that ’97 version, and we have been keeping track of them. through 1991, it increased annually as a function of the While we are not bound by the Concorde’s U.S. “Main Economic Indicators,” as published by the confidentiality agreement, we chose for many years to Organization for Economic Cooperation and respect it. We simply used it to guide us in understanding Development. One can only guess what it is today.) why many of the events in the sport took place, and how We have no idea what the results of publishing the they took place. It informed our writing, but we remained Concorde will be, though we expect they will be few, reluctant even to quote from it. and lacking any real impact. We do know that a number Increasingly, we found the principals releasing portions of people are going to be very upset. So be it. of the Concorde. When it suited the purpose of Mosley Others may be relieved, because their commitment to or a team owner, the Concorde was quoted or confidentiality will be meaningless, but in the end, release paraphrased, but very selectively. When it did not suit, of the Concorde is going to change nothing. There will, they conveniently wrapped themselves in the for example, be no impact on the struggle pitting the confidentiality agreement. manufacturers against Mosley and Ecclestone. It will, In reaction, we began to quote from the Concorde, to however, allow F1 mechanics to understand how it affects validate the information we were providing in our articles, their lives, and allow our readers to better understand and as the ‘leaks’ increased, so, too, did our quoting from some of what is going to take place as we approach the the document, frequently to clarify the public statements crisis point at the end of 2007. That, along with the of the signatories, or place them in context. selective leaks, seems to provide sufficient justification Ultimately, we have tired of the self-serving abuse of for finally publishing it. the Concorde’s secrecy by those bound to keep its Every effort has been made to preserve the look and content confidential. content of the pages of the original which was in our In two years, the Concorde will be replaced by a very possession, including the British spellings. We have different contract. As an historical document intrinsic taken the liberty of adding some minor punctuation, but to the sport, and as a reference tool, we believe it should what follows is, as closely and accurately as we can be available. reproduce it, what was distributed to the teams in late Further, most of the protagonists in Formula 1 say they 1996. The significant exception is what amount to want ‘transparency,’ which we have defined as ‘you show footnotes, in italic, added to explain the differences me yours, but I won’t show you mine.’ It seems now high between the ’97 Concorde and what has been made public time to help them achieve some greater measure of that about the 1998 variations. Taken together, we believe transparency, by publishing the Concorde. they accurately reflect the Concorde Agreement which When we originally received our Deep Throat package, now governs the parties, and will until 2008. we read the ’97 Concorde as though it were a novel, cover Forrest Bond, editor to cover. Much of it is tedious, in the way that only December 13, 2005 www.racefax.com © Copyright 2005, Word of Mouth. THE 1997 CONCORDE AGREEMENT www.racefax.com © Copyright 2005, Word of Mouth. December 7, 2005 1997 CONCORDE AGREEMENT CONTENTS PAGES* PDF 1. Championship Rights 2 ( 6) 2. Definitions 2 ( 6) 3. Commercial Agreement 3 ( 7) 4. Grant of Rights 3 ( 7) 5. Undertakings 4 ( 8) 6. F1 Commission 4 ( 8) 7. F1 Technical Working Group 11 (15) 8. Technical and Sporting Regulations 15 (19) 9. Promoters and Organisers 18 (22) 10. Entries 19 (23) 11. Calendar 20 (24) 12. Passes 21 (25) 13. Driver Contract Recognition Agreement 22 (26) 14. Constructors 22 (26) 15. Interpretation 22 (26) 16. Confidentiality 23 (27) 17. Governing Law, Invalidity, Arbitration 24 (28) 18. Notices 24 (28) 19. Term 24 (28) 20. Authority of Signatories 25 (29) *: “Pages” represent page numbers in the original Concorde, which when used are shown in the upper right corner of each page, keeping this reproduction faithful to and consistent with the original. The cover and two index pages are not numbered in the original. As a result, all the page numbers for this PDF version, which appear at the bottom of each page, are four greater than those used in the Concorde page numbering system, as shown in parentheses above. www.racefax.com © Copyright 2005, Word of Mouth. December 7, 2005 SCHEDULES TO THE 1997 CONCORDE AGREEMENT PAGES* PDF SCHEDULE 1 - “FOCA” 26 (30) SCHEDULE 2 - “The Manufacturers” 28 (32) SCHEDULE 3 - Title omitted in original: Constructor 29 (33) SCHEDULE 4 - Form of Grand Prix Contract 30 (34) SCHEDULE 5 - [Blank] 51 (55) SCHEDULE 6 - Organisation Agreement 52 (56) SCHEDULE 7 - Stable Regulations 57 (61) SCHEDULE 8 - Sporting Regulations 58 (62) SCHEDULE 9 - Payments 59 (63) SCHEDULE 10- Form of Commercial Agreement between the Commercial Rights Holder and each Competitor 61 (65) SCHEDULE 11- Driver Contract Recognition Agreement 75 (79) *: “Pages” represent page numbers in the original Concorde, which when used are shown in the upper right corner of each page, keeping this reproduction faithful to and consistent with the original. The cover and two index pages are not numbered in the original. As a result, all the page numbers for this PDF version, which appear at the bottom of each page, are fourgreater than those used in the Concorde page numbering system, as shown in parentheses above. 1 www.racefax.com © Copyright 2005, Word of Mouth. December 7, 2005 THIS AGREEMENT is made the day of 199 BETWEEN (1) The Federation Internationale de l’Automobile Association declared in conformity with the French law of 1st July 1901 and enjoying consultative status at the Council of Europe and at the United Nations, having its office at 8, place de la Concorde, Paris 75008 France (the “FIA”), represented by its President who has been granted full powers in this respect. (2) The persons whose names and addresses are set out in Schedule 1 hereto and who have signed this Agreement pursuant to Clause 19 (together “FOCA”) (3) The persons whose names and addresses are set out in Schedule 2 hereto and who have signed this Agreement pursuant to Clause 19 (together the “Manufacturers”) WHEREAS (A) The FIA is the sole international body governing motor sport. As such it governs the organisation of the FIA Formula One World Championship (the “FIA F1 Championship”) which is its exclusive property. (B) At the date hereof, FOCA and the Manufacturers have constructed racing cars and are participating in the FIA Fl Championship. (C) The FIA has entered into an agreement with FOCA Administration Limited (the “Commercial Rights Holder”) with respect to the FIA F1 Championship. How Ecclestone Gained Control of the Commercial Rights Paragraph (C) is the critical portion of this section, representing a shifting of the commercial rights lease, for want of a better term, from the teams to Bernie Ecclestone. With the signing of the first Concorde Agreement, management and control of the commercial rights related to Formula 1 were granted to the Formula One Constructors Association (FOCA), which was merely administered by Ecclestone. FOCA, in turn, had a separate commercial agreement with the Manufacturer teams. (The distinction between FOCA and Manufacturer teams dates back to the FISA- FOCA War, and the original Concorde. Manufacturer teams were those, including chiefly Ferrari, which sided with the FIA's FISA arm against the mostly British teams, which constituted FOCA.) Beginning with the 1992 Concorde, FOCA entered into a commercial agreement (the "Commercial Annex" to the Concorde) with an Ecclestone company, Motor Racing Developments (later Formula One Promotions and Administration Ltd.), which then administered the rights, i.e., MRD collected and/or distributed the race sanction fees, the prize fund for each Grand Prix (then $915,000), the television revenue, the travel fund for flyaway races, bonus payments for races beyond a total of 16 (then roughly $1.5 million), and any other proceeds from the commercial rights. With the 1997 Concorde, the commercial rights, which had always belonged to the FIA, were granted by FIA president Max Mosley to FOCA Administration, an Ecclestone company, rather than the company owned by the FOCA teams. That change was agreed by the various team owners when they signed the 1997 Concorde, and ultimately led to the current dispute between Ecclestone and the manufacturers and other team owners over the distribution of the rights revenue, a dispute which threatens to split the sport. www.racefax.com © Copyright 2005, Word of Mouth. December 7, 2005 2 (D) The parties hereto have entered into the present Agreement with a view to replacing and updating The 1992 Concorde Agreement for the period from 1 January 1997 until 31 December 2001, and continuing through the established co-operation between them the success and prestige of the FIA F1 Championship, and to permitting FOCA and the Manufacturers to enter and participate during such period in the FIA F1 Championship, which will continue to be governed by the rules of the FIA International Sporting Code (the “Sporting Code”) and all regulations relating to the FIA Fl Championship, as all are from time to time laid down by the FIA in accordance with the terms of this Agreement. NOW IT IS HEREBY AGREED AS FOLLOWS: CHAMPIONSHIP RIGHTS 1.1 FOCA and the Manufacturers expressly recognise that the FIA alone has the exclusive property in the FIA F1 Championship and is responsible for the organisation thereof, including in particular the right to the title thereof (and without limitation the expression “Formula One”), the copyright in the rules and regulations thereof, the right to supervise the sporting organisation of all events therein, and generally all rights relating thereto without limitation in time. Accordingly neither FOCA nor the Manufacturers shall do anything at any time which may in any way prejudice or diminish such rights. 1.2 Nothing in this Clause 1 shall prevent competitors (as defined in Clause 2.1) (or their respective sponsors and/or suppliers) who participate in the FIA F1 Championship from using the expression “Formula One” in relation to such participation. The title of the FIA F1 Championship shall never include or be used in conjunction with any words, letters or symbols (including trade marks) indicating a connection with (including a sponsorship by) any person or body without prejudice to the use of the letters “FIA”. DEFINITIONS 2.1 For the purposes of this Agreement, “competitor” shall mean a corporation, association, partnership or other entity whose entry to the FIA F1 Championship has been accepted for the relevant year. Page 6 3 2.2 For the purposes of this Agreement “Event” shall mean any event entered into the FIA Fl Championship Calendar for any year, commencing at the scheduled time for scrutineering and sporting checks, and including all practice and the race itself, and ending at the later of the time for the lodging of a protest under the terms of the Sporting Code and the time when a technical or sporting verification has been carried out under the terms of that Code. COMMERCIAL AGREEMENT 3. The FIA will procure that the Commercial Rights Holder shall enter into an agreement with each competitor, if called upon to do so by such competitor, in the form of the agreement attached to this Agreement as Schedule 10. GRANT OF RIGHTS 4.1 For the purposes of this Agreement, “Rights” shall mean all rights whatsoever, whether now known or hereafter invented or developed, including but not limited to all rights of exploitation worldwide in, and all sound, visual, audio visual, interactive media, electronic media, multimedia, telephonic media, computer (or similar devices) hardware and software, advertising, merchandising and other rights in any and all media, sound recordings, information or anything else, originated, recorded or otherwise held or retained by any means whatsoever, whether now known or hereafter invented or developed, and stored in any retrieval system, transmitted, broadcast, exhibited and/or exploited by any means whatsoever, whether now known or hereafter invented or developed, in so far as such rights are capable of being lawfully vested in and held by the FIA, subject to and in accordance with the terms of this Agreement and agreements entered into by the FIA, including those entered into pursuant to this Agreement with Promoters and Organisers of Events. 4.2 In relation to all FIA Fl Championships and all Events (and any aspect thereof), FOCA and the Manufacturers hereby irrevocably grant to the FIA on an exclusive basis the Rights: (a) in and ancillary to their performance, the performance of all persons connected to them and the performance of all machines and equipment both on and off the track at Events or otherwise (including testing); and Page 7 4 (b) in, of or pertaining to each Event and/or the FIA F1 Championship (or any aspect thereof). In this Clause 4 and elsewhere in this Agreement, “television rights” means, with respect to each Event, the right to originate, record and/or broadcast (or procure the same) on free-over-air terrestrial, satellite, satellite to cable and/or cable television (including pay television and pay-per-view television) anywhere in the world, either live or delayed, the whole or any part of the Event, including but not limited to moving picture images of all persons and all moving or static Formula One cars, using images and footage which has been originated or recorded by persons and organisations authorised by the FIA or by its grantee, nominee or assignee for this purpose. UNDERTAKINGS 5. FOCA and the Manufacturers each undertake that: (a) they will do nothing which may be prejudicial to the image and dignity of Formula One racing as a high class sport; and (b) they will not, without the prior written approval of the FIA, participate directly or indirectly in any form of racing which is or purports to be Formula One, and/or in any way exploits or uses the name and fame of the FIA F1 Championship. Fl COMMISSION 6.1 The parties hereto agree that the FIA Formula One Commission, called the “F1 Commission”, shall continue in existence and shall continue to resolve all matters concerning the FIA F1 Championship (other than matters referred to in Clause 6.2) and any changes to the regulations relating to such Championship, subject always to Clause 6.3. Page 8 5 6.2 The Fl Commission shall continue not to resolve the following matters: (a) matters not presently within the competence of the FIA World Motor Sport Council (herein referred to as the “World Motor Sport Council”) such as proceedings under the Code and regulations referred to in Recital D hereof; (b) matters within the competence of the FIA Circuits and Safety Commission (that is safety measures regarding circuits); (c) the nomination and/or appointment of the FIA Inspectors, Observers, Delegates and Stewards of the Meeting, and (d) the matters referred to in Clauses 6.2(b) and 6.2(c) shall remain under the final and exclusive authority of the World Motor Sport Council or its Secretariat, 6.3 Save as provided in this Clause 6, each of the FIA commissions concerned with Formula One shall continue to report only on Formula One matters to the F1 Commission, which shall then submit its resolutions on matters so referred and other matters within Clause 6.1 to the World Motor Sport Council for decision. The World Motor Sport Council shall continue not to resolve matters referred to in Clause 6.1: it may only approve or disapprove resolutions proposed by the Fl Commission. If the World Motor Sport Council do not approve a resolution proposed by the F1 Commission, it shall not modify such resolution, but shall remit it to the Fl Commission for reconsideration with its recommendation. The World Motor Sport Council can itself continue to submit matters within Clause 6.1 to the Fl Commission for consideration by the F1 Commission, which shall then notify its opinion and its eventual proposal to the World Motor Sport Council for decision. 6.4 Nothing in this Clause 6 shall prevent the World Motor Sport Council from continuing to consult other FIA Commissions regarding Formula One matters. Page 9 6 (a) The Fl Commission shall appoint a delegate to the World Motor Sport Council who shall be a senior member of the management (who is responsible for Formula One matters and who shall be the sole delegate during his employment) of the member of the F1 Commission who is a signatory to this Agreement, and who has competed in the FIA Fl Championship as a competitor for the greatest number of seasons since 13 May 1950, and such appointment shall be for the period from 1 January to 31 December in the following year (the “F1 Commission’s Delegate”). (b) The Fl Commission’s Delegate shall report to the World Motor Sport Council on all decisions taken by the Fl Commission and shall vote in accordance with the decisions of the Fl Commission, (c) If the Fl Commission’s Delegate is unable to attend any of the meetings of the World Motor Sport Council, a deputy may attend in his place who shall be a senior member of the management (who is responsible for Formula One matters and who shall be the sole delegate during his employment) of the member of the F1 Commission who is a signatory to this Agreement and who is the most successful competitor over the previous ten years. (d) A representative of the Commercial Rights Holder (the “Representative”) shall sit by right on the World Motor Sport Council with full voting rights on all matters, and on matters concerning Formula One shall vote in accordance with the decisions of the Fl Commission. (e) The FIA shall procure that such amendments to its Statutes shall be made as may be necessary (if any) to give effect to this Clause 6.5 throughout the term of this Agreement. Page 10