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Concorde Agreement: Impact on Formula One in 2021

  • by: Jonathan Hall
  • On: 12, Feb 2020
3 min read

Next year will see unprecedented changes to Formula One. As part of the Concorde agreement, the Fédération Internationale de l’Automobile (FIA) and F1 governing body have announced a $175million budget cap from 2021.

Current Formula 1 team budgets range from $120million to $500million. Although rule exemptions will include marketing costs, driver pay and the salaries of the three highest-paid executives, this cap will apply to all aspects of research, innovation, technology development, logistics and payment of the thousands of engineers, technicians and leaders who work in the sport every year.

How will the Concorde agreement impact Motorsport in the coming decade?

3 Possible Outcomes of the Latest Formula One Regulation Changes

1. Superior Quality

Pat Symonds, Chief Technical Officer at F1 and former multiple championship winner states, ‘While we have a sport where marginal gains exist, and no matter how marginal those gains are, prolific spend will bring performance to the big teams that is not available to the teams on the lower budget.’ Without the ability to spend billions on new technology, marketing and advertising, the sport will be a much more level playing field.

The first Concorde agreement was signed in 1981 following concerns that the race favoured large, well-established manufacturers, and Bernie Ecclestone united teams and constructors in creating a fairer sport. The decades after the first agreement have seen changes such as larger cockpits, rib tread tyres, ultra-clean fuels and hybrid engines, alongside the stellar careers of stars like Ayrton Senna, Michael Schumacher and Lewis Hamilton, proving that new legislation is no barrier to unforgettable Motorsport moments.

The rule changes could help encourage competition from new sources, with brands of smaller capital but equal capability and quality able to freshen up the race. Motorsport will become truly exciting entertainment that makes champions of the most talented, not the biggest financial backer.

2. Sustainability

The European Automotive sector generates 12% of the continent’s carbon dioxide emissions. Car racing alone produces over 250,000 tonnes of CO2 pollution every year – energy which could be used to power 30,000 houses.

The 2040 ban on diesel and petrol cars, which aims to reduce carbon emissions by increasing the use of electric cars, is driving the industry towards a sustainable future. In 2019 Formula 1 executives supported the environmental initiative by committing to making the sport completely carbon neutral in the next 10 years.

To reduce its emissions by the necessary 50% in the next ten years, Formula One will need to implement the use of biofuels. Transitioning to sustainable fuels will dramatically cut greenhouse gases and, as biofuels can be created from used cooking oil or surplus crops, reduce cost and waste.

A budget limit will force engineers and designers to innovate for the same performance on less money. Innovation in fuel use will be combined with efforts to increase battery efficiency for Grands Prix with all the speed at a fraction of the cost. From McLaren’s rear brake pedal to the double-chassis Lotus, innovation has always been at the heart of Motorsport, and the budget cap could prove a blessing in disguise.

3. Less Innovation – Or More?

Whilst the budget cap could restrict experimentation with new concepts and technologies, engineers and technicians are more likely to think even further outside the box for innovation. Although there will probably be no big engine changes, Formula One aims to make sure the 2021 season showcases ‘A sport that continues to be the world’s premier motor racing competition and the perfect showcase of cutting-edge technology’.

One area to explore is Virtual Reality (VR). VR would empower unlimited new vehicle designs and upgrades in an entirely virtual space. Different car models, weather conditions, tyres and situations could be simulated against a new design and extensively stress tested even before making a single prototype. Dramatically reducing design time and resource spend, Virtual Reality in Motorsport would facilitate bold design and innovation at every level.

The Future of Motorsport

The last century has proven that regulatory restrictions and unpopular changes can improve the F1 experience for teams, drivers, constructors and fans.

Read the Automotive Market Report for 2020.

Find out more about our award-winning Motorsport recruitment services.

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