Formula 1 has yet to draw up its next Concorde Agreement, but ahead of the all-important negotiations that will shape the trajectory of the sport from 2026, Ferrari team boss Fred Vasseur has urged F1 to heed the lessons from the past.
Grand Prix racing’s Concorde Agreement, which governs the commercial relationship between F1, its teams, and the FIA, is set for its ninth variant in over four decades, having been first introduced in 1981.
As Formula 1 embarks on its global expansion strategy, the next covenant assumes paramount importance. It will not only shape the financial distribution among teams but also likely determine the sport's ability to maintain its appeal in expanding markets.
A well-structured Concorde Agreement will provide the stability and predictability that investors and potential new entrants seek, enabling F1 to capitalize on its global growth aspirations.
However, the topic of new entrants and grid expansion, heavily promoted by FIA president Mohammed Ben Sulayem, remains a contentious and politically charged issue.
While the governing body is keen on adding an 11th team to the field, with Andretti Cadillac submitted a bid that was accepted by the FIA in October, a majority of F1’s teams are opposed to the US outfit’s entry, fearing that their share of the prize money pie would shrink if another team joined.
Andretti, on the other hand, argues that its presence could actually boost the overall prize money pool, mitigating the financial impact on the existing teams.
To safeguard the team's interests, Formula 1 has imposed an anti-dilution fee of $200 million that any new team would have to pay to join the sport's ranks, to be shared evenly among the current 10 teams.
However, there has been a push to raise this threshold to as much as $600 million.
Complicating the financial landscape further is the implementation of a cost cap, designed to level the playing field among the teams.
However, this cap has been adjusted in 2023 to account for global inflation, raising concerns among team principals like Vasseur about the shifting financial landscape.
They worry that these constant adjustments could undermine the stability and predictability that are crucial for long-term planning.
"It doesn't matter the format, the organisation and the rules,” Vasseur told the media in Abu Dhabi last month. “At the end of the day, if you are 11 teams, you are more exposed than if you are 10.
"When you are in a positive situation and the business is going up, I think everybody is positive and optimistic, but I'm not sure that it will stay like this forever.
"We have to really pay attention. On the one hand, we are moving to increase the costs at every single meeting. We put inflation [into the cost cap], we change the index for the inflation… blah, blah, blah, and we increase the CapEx.
"And now we want to dilute more the incomes.
"It's not easy also to run a business and to do forecasts when you have this kind of change so often and honestly we are not learning from the past and this is a big issue."
As F1 embarks on its pivotal Concorde Agreement negotiations, the challenge lies in balancing the interests of the existing teams, the potential growth prospects of an expanded grid, and the financial constraints imposed by the cost cap.
A delicate balance will be required to strike a deal that ensures the continued success of Formula 1 in the years to come.
Williams team boss James Vowles is also in the camp of those who are against an expansion of the grid. The Briton argues that a cautious approach, prioritizing stability and long-term seems more prudent as F1 navigates the path towards financial sustainability.
"It's not that there's no room for an 11th team, it's just we have to be financially stable to do so," said Vowles.
"I appreciate we're increasing things but we are getting ourselves towards financial stability for the first time in forever, really. Let's get to that point and see where we are.
"So it's not actually against an 11th team whatsoever at all, and I think Concorde should reflect that. Let's grow at a point where we can grow. I'm not sure that's today."
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