What is the Concorde Agreement in Formula 1 and why does it matter?
In less than a month, the current Concorde Agreement will expire, paving the way for the new five-year deal to come into effect.
The new contract, covering the 2026–2030 period, has already been signed and now awaits activation.
It will come into force with the new year, marking a pivotal season for Formula 1 as the sport introduces new technical regulations and phases out the current generation of ground-effect cars.
What is the Concorde Agreement in F1?
The new Concorde Agreement will mark the ninth in Formula 1’s history, following the inaugural deal signed in 1981 at the Concorde Hotel in Paris, to end the well-known war between FISA (Fédération Internationale du Sport Automobile) and FOCA (Formula One Constructors’ Association), with Jean-Marie Balestre on one side and Bernie Ecclestone and Max Mosley on the other, each vying for control of the sport.
The Concorde Agreement is essentially a contract between Formula 1’s ten current teams — rising to eleven in 2026 with Cadillac’s entry — the FIA, the sport’s governing body, and F1’s commercial rights holder, Liberty Media. Its purpose is to ensure stability, fairness, and financial transparency across the sport.
This includes, for example, how the ten teams share the prize money — the payments distributed to teams from the sport’s commercial revenue at the end of each season. In addition, Ferrari receives an annual bonus of 5% (up to €1.1 billion of the prize pot) in recognition of its history as the only team to have competed in every single Formula 1 season.
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Why does the Concorde Agreement matter?
At its core, the agreement is built around four key areas. First, it governs revenue distribution, determining how prize money, sponsorship, and other income are shared among the teams.
Second, it establishes governance, outlining the roles and powers of the FIA, the teams, and the commercial rights holder in the sport’s decision-making processes. This is particularly significant now, with the FIA elections approaching and Mohammed Ben Sulayem set to be re-elected for the next term.
Third, it defines the sporting rules, covering both technical and sporting regulations, including how championships are run and enforced — another key aspect that led to the establishment of the 50/50 power unit rules, splitting performance equally between internal combustion and electric components, set to debut soon.
Finally, it sets participation requirements, specifying the criteria teams must meet to compete in Formula 1. This last point has proven particularly significant in recent times, as it was central to the dispute that ultimately led to Andretti’s proposed entry being discarded, with Cadillac later securing the slot for the 2026 season.
History of the Concorde Agreements in F1
The first Concorde Agreement was signed in 1981 at the Concorde Hotel in Paris, which is where it got its name. It formalized revenue-sharing and participation rules, guaranteed teams a share of commercial income, and introduced a framework for governance and sporting regulations.
The second agreement ran from 1982 to 1987, further reinforcing the principles of the first. The third agreement lasted from 1992 to 1997, though it effectively lasted only a year due to disputes involving Williams, Tyrrell, and McLaren.
The fifth agreement covered 1998–2001, while the sixth agreement spanned 2001–2009, an unusually long eight-year period. The eighth agreement, the last under Bernie Ecclestone’s management, was signed in 2013.
The most recent Concorde Agreement, signed in 2021 amid the uncertainty of the COVID-19 pandemic, introduced highly modern concepts such as the budget cap and marked the first agreement under Liberty Media’s management.
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What to expect from the next F1 Concorde Agreement
The upcoming Concorde Agreement will naturally focus heavily on the new regulations but will largely retain the framework of its predecessor, particularly regarding the budget cap, as enforcement is tightened and rules clarified to prevent loopholes.
Cadillac’s entry as the eleventh team will also prompt a redistribution of prize money, while discussions continue over raising the budget cap from the current $135 million to $220 million.
Discussions are also underway to include maternity leave provisions for employees and to cover employee entertainment, with the costs of the latter set to be excluded from the budget cap.
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