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The Diniz Family buys into Prost

AS has been rumored for some time the Diniz Family, one of the richest in Brazil, has bought a shareholding in Prost Grand Prix. The money raised will be used by the team to pay for the supply of Ferrari V10 engines for the next couple of years. Pedro Diniz has also announced that he will not be racing in Formula 1 next season and it seems that Diniz's long-term goal now is to play an important role in running a team rather than continuing his own racing career. The announcement means that Prost may be in a position to sign up a driver on merit alone. The obvious move now would be to try to sign up a fast young driver - such as Giorgio Pantano - to partner Jean Alesi. This will be a cheap option and also one which will help Alain build up the company in the future. It should be remembered that Prost was the first F1 team to test Jenson Button last year but failed to keep hold of the British youngster. Prost is unlikely to make the same mistake again.

Selling a share in the company is a curious move for Alain Prost to have made unless the team was in desperate need of funds and in his press statement about the sale Alain Prost admitted that the strategy was short-term and "aimed at increasing our budget". The implication is that Alain had little choice given the withdrawal of Gauloises (which would not pay what Prost was asking for the amount of space it wanted on the car) and other French sponsors and the loss of free engines from Peugeot. We have heard stories in recent days which suggest that Yahoo! may also be looking for a deal with a rival team because of Prost's poor performance in 2000.

The interesting thing - which the team did not reveal - is which company Diniz has bought into. Our understanding of the Prost empire is that there are a variety of different inter-related companies, which involve various different areas of the team's operations, including the race team, the windtunnel, the marketing, the merchandising and so on. In addition there are various holding companies involved and so it is not clear exactly what Diniz has acquired. What is significant is that Prost retains the majority shareholding in the team. Our sources say that the Diniz share is almost certainly 40%. It is likely that in addition to buying the shares Diniz has given assurances that he will bring a large part of the budget needed in 2001.

This may not sound easy but the Diniz Family has considerable power to attract sponsorship. It runs the CBD distribution company, one of Brazil's largest, and the Pao de Acucar supermarket chain which has around 30 million customers a day. In the past Diniz has been able to generate money by offering preferential product-placement in its stores. This means that the companies involved make bigger profits and so are happy to contribute to an F1 sponsorship as this is, in effect, a bonus which offers them free global publicity. In the past such deals have been done with Parmalat, Kaiser Beer, Duracell, Arisco and Marlboro. It is expected therefore that the Prost sponsorship package next year will involve a number of companies which market products through the Diniz companies.

Pedro Diniz said that Prost had given the option to drive for the team if he wishes to do so but decided that he would stop racing.

"Since we have made a big investment in Prost Grand Prix, I have to think about long-term plans for my future and commit entirely to the success of the team " he said. "I will concentrate on learning all the other sides and aspects of F1. I think the six years I have been in this sport will prove very useful in starting this new phase in my career and in contributing to the progress of Prost Grand Prix. I believe in Alain and in this team and that is where I see my future."

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