The agreement is a binding contract that defines governance structure, revenue/prize money distribution among all the involved parties, and other commercial related aspects of the business. For a constructor team to participate and compete in the championship, they have to abide by the terms as mentioned in the Concorde agreement.
With the seventh Concorde agreement ending in December 2020, the new Concorde agreement has been approved and signed by all participating constructors: Ferrari, Mercedes, McLaren, Redbull, Alpine (formerly known as Renault F1), Williams, Alfa Romeo, AlfaTauri, Hass, Aston Martin (formerly known as Racing point F1)), Formula One group and the FIA.
Why is the Concorde Agreement so called?
It is called the Concorde Agreement, as the first agreement was signed in 1981 at the FIA headquarters in the Place de la Concorde in Paris.
So far, there have been seven Concorde Agreements (1981,1987, 1992, 1997, 1998, 2009 and 2013). The eighth and the latest Concorde agreement has come into effect starting 2021 and will last till 2025.
Some of the noticeable highlights of the new Concorde agreement that has generated a lot of buzz among pundits and spectators are the new budget cap which restricts team's spending on the development of cars.
In effect, it aims on reducing the financial disparity currently existing between the top and smaller budget teams. Along with the budget cap, new technical regulations are set to be introduced from 2022, which would make the cars more efficient and faster.
After the latest Concorde agreement was signed by all teams, former Formula One CEO Chase Carey said:
"All our fans want to see closer racing, wheel-to-wheel action and every team having a chance to get on the podium. The new Concorde Agreement, in conjunction with the regulations for 2022, will put in place the foundations to make this a reality and create an environment that is both financially fairer and closes the gap between teams on the race track.”
FIA president Jean Todt shared similar views, saying in this regard:
"Over its 70-year history, Formula 1 has developed at a remarkable rate, pushing the boundaries of safety, technology and competition to the absolute limits, and today, an exciting new chapter in that history is about to begin."Published 13 Jan 2021, 13:51 IST