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F1 Concorde Deals: Smoother Talks, Ferrari’s Bonus Cut?

21/05/2024

The atmosphere is positive as F1 teams negotiate the 2026 Concorde Agreements, with Ferrari’s bonus under scrutiny.

Behind the scenes, a battle as significant as the on-track action is currently unfolding. The FOM and the ten teams are negotiating the next Concorde Agreements, set to take effect from 2026.

Central to the discussions is the revenue distribution between FOM and the teams. Will the balance shift, and if so, in whose favour?

The current Concorde Agreements, expiring at the end of 2025, stipulate that teams receive 50% of F1’s profits up to a certain threshold. Beyond an unspecified profit level, the teams’ share decreases.

Ferrari, due to its historic status in F1, enjoys special privileges under the Concorde Agreements, receiving 5% of the total payment pool.

Additionally, this bonus is progressive. If F1’s revenue exceeds one billion euros, as it has in recent quarters, Ferrari’s bonus increases. At its peak, this ‘bonus of the bonus’ would allow Ferrari to receive up to 10% of the total payment if revenues hit 1.5 billion euros, which matches current figures.

This privilege is increasingly questioned by other teams.

The proposal is to cap the maximum bonus at 5%, regardless of F1’s final revenue level.

In essence, Ferrari would retain privileges, but they would be slightly reduced.

Negotiations in Full Swing

Greg Maffei, CEO of Liberty Media and superior to Stefano Domenicali, confirmed to the media that the teams have received an initial draft of the agreement.

“We have just sent out our new proposed version of the Concorde Agreements.”

“There have been discussions with some teams about this and the revenue distribution, and we have reason to believe that it should be relatively easier than the previous negotiations.”

“Some Teams Will Want More Money”

“I am sure there are teams that will want more money than we are willing to give. There is always that tension. But I believe there is goodwill—created because all the teams are earning more money thanks to F1. Their own sponsorship deals have also significantly strengthened—just look at the success of sponsorships at Red Bull, McLaren, and even Ferrari now with their new contract with HP.”

“The teams are doing very well compared to before our involvement, so hopefully, this goodwill continues.”

Wolff and Horner in Good Spirits?

Can Maffei’s optimism be confirmed by key F1 teams Mercedes and Red Bull?

Toto Wolff, for one, is indeed optimistic.

“We have the foundation, the fundamentals of our discussion—on how Formula 1 envisions the next five years.”

“There is good in that. There are a few points we will discuss, the pros and cons, and there will of course be negotiations… But fundamentally, we all want to achieve the same goal: to advance the sport. And if financial results improve, both the teams and the sport benefit.”

Christian Horner’s remarks also affirm the general sentiment: the negotiation might be less tense than expected.

“There will be the usual discussion between the teams wanting more and the promoter wanting more, but what we have works relatively well.”

“I think the foundations are relatively sound. As the sport continues to evolve and grow, there are areas where we can tweak the agreement.”

“But the fundamental basis of the agreement will be an evolution rather than a revolution. Sometimes, if it isn’t broken, don’t fix it.”

F1 Concorde Deals Smoother Talks Ferrari’s Bonus Cut

F1 Concorde Deals: Smoother Talks, Ferrari’s Bonus Cut?. F1 Concorde Deals: Smoother Talks, Ferrari’s Bonus Cut?

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