Atlas F1 Magazine: The Weekly Grapevine, Brand New Vintage
by Dieter Rencken, South Africa
Atlas F1 Magazine Writer


"Further to discussions regarding the long term development of the FIA Formula One World Championship, the FIA, Formula One Management and Ferrari have agreed to prolong the Concorde Agreement for the period 2008 to 2012.

The FIA, Formula One Management and Ferrari issued the following statements:

Max Mosley, FIA President said, "We are very pleased to have reached this agreement with Formula One's commercial rights holder and the oldest team in the Championship. The agreement is significant because it will ensure the future development of the FIA's most important Championship."

Bernie Ecclestone, FOM President said, "Formula One Management are delighted that this agreement is in place and that the future of Formula One has now been stabilised."

Luca di Montezemolo, President and CEO of Ferrari said, "It is important and also pleasing that the FIA, which is the governing body and FOM, which represents those who have organised Formula One in these past years and Ferrari, which is the only team to have taken part in the World Championship, without a break, since its inception, have put out a strong message of stability for the future of Formula One. This agreement is in line with what Ferrari had hoped for, for a long time."

Bernie Ecclestone & Jean TodtThus goes a press release put out by Bernie Ecclestone's company, Formula One Management Ltd, on Wednesday afternoon. Interestingly, the FIA's website carries the same wording, whilst Ferrari's press statement alters hardly a bit, save that Ferrari's top man, Luca di Montezemolo, is quoted first. The message is clear, then: there is absolute agreement between the three parties.

Analysis, though, shows that this may not be the case, for since when was Concorde, the agreement which governs the commercial, technical and sporting aspects of Formula One until 31 December 2007, a tripartite agreement, one to be 'prolonged' by just three parties? So, sure, the three parties may have agreed to an extension, but what of the other signatories?

Concorde, remember, is the secret document which restricts all ten teams to just fractions of FOM's income, the document which requires from its signatories unanimous agreement for any deviation, the document which every person of importance in Formula One agreed as recently as October last year had outlived its useful life.

Reading between the lines gives some pointers. First, 'prolonging' the agreement does not mean it stays as is. A lease on a property can be prolonged, but such extension does not imply automatic adherence to rental or other clauses. So, whilst the concept of Concorde may be prolonged, its essence is sure to be totally different. And, 'by how much' is the key to accepting or rejecting the significance of the press releases.

Nowhere do the releases actually refer to 'signatories', so have pens actually been put to paper? Would the FIA not have to call a full Motorsport Council to ratify any such agreement? After all, it has far-reaching consequences. Do the controlling body's articles of association permit its president to sign such agreements without first having been put to a vote?

Next, a question not unrelated to the outcome of the 'Banks vs. Bernie': does Ecclestone have the permission of his majority shareholders to sign such an agreement, particularly after losing that court case? The implication there, then, was that Ecclestone needed to refer (and defer) all major decisions to a board over which he no longer held control. Whilst the banks may well be delighted that some form of agreement has been reached in a business of which they know the square root of zero, surely, even if only for face-saving reasons, they would wish for input over its effects on their bottom lines?

Ferrari President Luca di MontezemoloThen, remember the Memorandum of Understanding between the breakaway body, the GPWC, and FOM? That, we were told, had been signed (and, all indications were that it had been agreed), and where is that now? So, whether signed or not, the lifespan of this agreement may be equally short.

What is not in doubt, though, is that some form of agreement has been reached between the FIA, Ferrari and the commercial rights holder. And, that agreement is crucial to the future well-being (or not) of the GPWC, which, until October counted BMW, Ferrari, Ford, Mercedes and Renault amongst its members, and had made strong overtures to Honda and Toyota.

Then Ford left the sport, so there were four, plus potential membership by the Japanese companies. Then, last Sunday, Honda Racing President Shoichi Tanaka stated his company was "completely neutral on membership", reducing potential membership by one. Now that Ferrari has publicly sided with the Ecclestone camp, the GPWC has been further marginalized to just three, plus one potential member from ten teams. Hardly a majority, that. Any wonder the GPWC's Media Officer refused to make any comment on Wednesday?

That FIAT is sailing close to the financial wind, that Ferrari is bleeding from building the majority of its products in euros and selling them in US dollars, that the Gestione receives much of its sponsor income in the American currency and pays out in European denominations, are well known indicators of the commercial state the Italian group flounders in. Therefore, at the root of this agreement there is sure to be a good pile of money - something FOM has amassed at the rate of over $300m per annum for the past seven years, and will do so for the next three; something FIAT-Ferrari has lost in equal measure over the same period and will probably do so for considerable periods yet to come.

Buying Ferrari's agreement, then, was always going to be a matter of writing a cheque - the only doubt being its digits. Whether Ferrari totally commits to the agreement is secondary, for in one fell swoop Ecclestone and the FIA have destroyed the 'enemy', to wit the GPWC. And, that sort of victory is priceless to F1's commercial rights holder. The big question, though, is whether the 'prolonged' Concorde holds long-term value for its participants and the sport, for the rest of the field can leave Formula One without penalty come 2007 if they have not agreed to any prolongation, so are bound only by existing clauses. Ferrari has now committed, though; but that too is as easily rectified...

Here is betting that at least one team-owning motor company, probably two or three, will take the gap when their obligations to the present Concorde expire. After all, their facilities are easily converted to development of road cars, and their wind tunnels a source of envy in the automotive sector. Then, what chance have the Minardis and Midland-Jordans of taking on the might of a team so obviously cosy with the sport's rulers?

Finally, on a point of accuracy: Ferrari states in its release that (it) 'is the only team to have taken part in the World Championship, without a break, since its inception'. Well, according to records, it failed to take the start at the very first race in the FIA Formula One World Championship, the British Grand Prix. The reason? A squabble over finances Enzo Ferrari felt his team was not offered enough to make the journey from Maranello to Silverstone. So, not only did Ferrari boycott the very first F1 Grand Prix, but did so over money!

Maybe that history lesson explains the root cause of the FIA/FOM/Ferrari 'agreement'...

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Volume 11, Issue 3
January 19th 2005


Interview with Nick Fry
by Dieter Rencken

Technical Analysis: BAR 007
by Craig Scarborough

Technical Analysis: Sauber C24
by Craig Scarborough

Regular Columns

On the Road
by Reuters

Elsewhere in Racing
by David Wright & Mark Alan Jones

The Weekly Grapevine
by Dieter Rencken

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