Teams are in discussions with F1 owners Liberty Media over the terms of the new Concorde Agreement that is due to come into force from 2026.
The document defines how F1 is run – with one agreement relating to the regulatory framework of grand prix racing, and another outlining the commercial terms.
Draft outline terms were recently sent to teams as the next step of this progress, ahead of what are likely to be intense discussions to reach an agreement that all parties are satisfied with.
Prize structure situation
Carlos Sainz, Ferrari SF-24 Oscar Piastri, McLaren MCL38
Photo by: Andy Hone / Motorsport Images
The Concorde Agreement lays down the exact prize structure, and defines how much teams receive both as a share of the pot but also for each finishing position in the constructors’ championship.
For the current Concorde Agreement that runs from 2021 until 2025, teams received a 50% share of F1’s profits up to a certain point, with them then getting a smaller share if more income is generated.
It is understood that at current revenue levels, in excess of $3 billion last year, F1 teams receive a 45% share.
One of the more intriguing aspects within the Concorde Agreement has been an extra historic payment that Ferrari receives because of its long-term significance to the series. It is the only team to have competed in every season since the world championship began.
While extra payments to championship-winning teams are based on success, Ferrari’s bonus is irrelevant to its competitive fortunes on track.
Under the terms of the current Concorde Agreement, Ferrari receives a payment that is at least 5% of the entire prize fund.
It is understood that it receives this baseline figure if the total prize pot distributed to teams does not exceed $1.1 billion.
However, there is believed to be an escalator formula in place that means if the prize pot get bigger, then Ferrari gets a greater share of each incremental step up.
This eventually maxes out at 10% for anything above and beyond around the $1.6 billion mark – exactly where the income figures are believed to be now.
Sources have revealed that the proposal in the next Concorde Agreement is for Ferrari’s bonus payment to be capped at 5% no matter what the prize pool level is.
This means Ferrari will still get a sizeable chunk of F1’s incomes, but it will lose the escalator bonus it has enjoyed most recently.
Ongoing debate
Frederic Vasseur, Team Principal and General Manager, Scuderia Ferrari, talks to the press
Photo by: Sam Bloxham / Motorsport Images
While some of Ferrari’s competitors believe that the need for it to be alone in receiving a special bonus has had its time, others accept that there is good reasoning behind it getting special treatment.
“If you ask an average person who they know in Formula 1, you will see that Ferrari is still a name that stands out.
“That’s the truth behind it. They bring a certain level of heritage and recognition to the sport. So I think there’s a reason these things exist.”
While teams have received the Concorde Agreement draft terms from F1, its contents are confidential and they are reluctant to elaborate on what they think about things right now.
Asked about the Concorde Agreement draft situation in Imola, Ferrari team boss Fred Vasseur said: “You know you can ask the question, but the question is for you, because you know perfectly that I will never reply. Enjoy asking the question, but you know that I will never reply!”
Speaking in an earnings call recently, F1 CEO Stefano Domenicali said that the priority for him was to deliver a Concorde Agreement that was good for the long term and did not deviate much from the previous one.
“We are in the process of discussion with the teams,” he said. “The most important point is to keep the situation as stable as possible. These are the points of discussion.
“And as you can imagine, we cannot go into detail of it, but as soon as we can, we will share what we can do.
“The situation is optimal to keep discussing with the teams, with all the relevant parties, the best way to finalise everything for a stronger future up to a longer term.”