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FOM settle royalties row // Bernie Ecclestone and the teams go head to head again

Published by Christine

This article was originally written for BellaOnline, but is republished here for posterity.

Bernie Ecclestone has been trying to keep the row between himself and the teams under wraps over the past few days, and with the diffuser row dominating headlines, that's been easy to do. However, it has emerged that a couple of the teams had even threatened not to get on the plane to Australia, until they were paid the money they were owed.

The argument stems from the fact that Bernie Ecclestone and his company collect all the royalties for the teams and then dish them out accordingly. FOTA issued a statement saying that Bernie owed them money for the past three years, 2006 to 2008. However, Ecclestone has been quick to dispel this story.

He said that another arm of his company - Formula One Administration (FOA) - had in fact paid everything up until the Concorde Agreement ran out in 2007. This agreement was signed by all the teams entering the sport and regulated a lot of the commercial agreements between Bernie and themselves.

However, all parties have been unable to agree on another Concorde Agreement, so FOA had to establish new contracts with each team individually. From the statement issued by Bernie:

FOA has made new contracts with various teams currently competing in the FIA Formula One World Championship on an individual basis, whereby the team has committed to participate in the Championship for an agreed period in return for which FOA has agreed to pay a share of an annual prize fund generated from and calculated with reference to its profits. Each of these teams has been paid its full prize fund entitlement to date.

Ecclestone says that the problem lies with some teams that have not yet made a contract with FOA, and who have even received payments based on royalties they may incur in the future. He says this should be goodwill enough, considering there is no solid contract between them.

Of course the teams disagree, and now that they have FOTA, they hope to use this organisation and unanimity to agree a new Concorde Agreement and sort the situation with Bernie. Unfortunately, Mr Ecclestone continues to assert that he has no dealings with FOTA, and only with the teams themselves, so this situation may not resolve itself for a long time yet.