F1 engine agreement for 2017-2020 contains some fascinating details.

A closer look at the new F1 engine agreement for next year reveals some fascinating insights, as Adam Cooper explains.

The definitive version of the much vaunted F1 engine agreement for 2017-2020 contains some fascinating insights into the process of how it was achieved, and in particular why it took so long to agree details of how the "obligation to supply" for power unit manufacturers should be framed.

The essence of the agreement is that any team with no ongoing engine contract for the following season can join an FIA process which will see it allocated a supply from the manufacturer that has the fewest number of teams on its books.

If two manufacturers supply only one team, for example, there will be a ballot.

The legal jargon that has been added in an appendix to the 2017 Sporting Regulations shows just how complicated things can become when the FIA in effect acts as a broker between teams and power unit suppliers in what would usually be a commercial agreement between two willing parties.

The prospect of being forced into marriages they might not want clearly concerned the manufacturers, and encouraged them to ask for clauses that cover their backs.

Among them is the remarkable provision that the team concerned has to agree to not criticise the manufacturer in public, and vice versa.

One team principal has jokingly called this the "Red Bull clause," a reference to the management's negative comments about Renault, which did little to encourage any rivals to go into partnership with the team.

It reads as follows: "The New Customer Team and the Power Unit Manufacturer shall not, and will procure its affiliates and/or their respective senior executives, employees, directors and shareholders shall not take any action and/or make any omission, deceptive, misleading or disparaging or negative comments, which directly injures, damages or brings into disrepute the public reputation, goodwill or favourable name or image of the other party to the supply agreement."

How to enforce it

While it would be logical to expect a team that has used the FIA process to gain an engine deal to treat its new partner with an appropriate degree of respect, it remains to be seen quite how the regulations will be enforced if things do get messy.

In a similar vein, there's a clause related to the ownership of teams.

In essence, a manufacturer will not be forced to supply a team whose shareholders or management have a dodgy past, on the basis that it would not be good PR.

"The New Customer Team and/or any senior executives, directors or beneficial shareholders of the New Customer Team should not at any time (i) be listed or included in the official EU and/or US published sanction lists; (ii) have been convicted of any indictable criminal offence; (iii) have been convicted by any government or government agency in connection with fraud, money laundering, racketeering or terrorism activities; and/or (iv) have been declared bankrupt; and/or (v) have committed other identified action which, in the reasonable opinion of the Power Unit Manufacturer, harms the reputation of such Power Unit Manufacturer. This clause shall also reciprocally apply to the Power Unit Manufacturer."

The agreement allows for cases where the customer team runs the engine "under a white label/unbranded way," whether this be at the request of the team itself, or the manufacturer.

However, if the team sells the naming rights of its engine to third party – as Red Bull did with TAG Heuer – then the manufacturer can renegotiate, and in effect get a slice of the action.

Manufacturers also cannot be forced to supply a team that it owned by a rival car maker and, in addition, the customer team is not allowed to carry sponsorship from a car brand, unless the supplier is happy with it - and this could put at risk arrangements like the Red Bull/Aston Martin deal.

Finally, it's worth noting that, under the schedule proposed by the FIA, teams will have to pay for the power unit supply much earlier than is standard practice, something that teams with ongoing cash flow issues may struggle to deal with.

Although the timing can be renegotiated, in theory payment will be made in four installments, as follows:

- 25 percent on the date of signature of the supply contract;
- 25 percent on or before 30 October of the calendar year prior to the year of supply;
- 30 percent before the start of the Championship season; and
- The remaining 20 percent before the fifth Formula 1 Event of the Championship season.

Source: Motorsport.com

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