NOVEMBER 2, 2000

The future of Minardi

WHEN you look at it on paper, the Minardi team does not appear to have much of a future but it will survive. It always has. Giancarlo Minardi is an expert at that.

WHEN you look at it on paper, the Minardi team does not appear to have much of a future but it will survive. It always has. Giancarlo Minardi is an expert at that. He has been running racing teams for 28 years and he has never really had a decent budget but he continues to dream that one day the pieces of the jigsaw puzzle that makes a successful Formula 1 team will fall into place. The years have seen his stake in the team reduce to just 14.5% but a bunch of his pals and fellow enthusiasts hold another 15.5%. Minardi remains the man in charge. He is the embodiment of the dream and the man that the fans want to see running the team. Minardi is the underdog and as such it has a remarkably strong brand value when compared to some of the midfield teams who have been more successful. Minardi is an institution and at every race track in the world you will see the Minardi flags waving.

Minardi has been in F1 now for 15 years and has helped the careers of many youngsters as they bid to climb the Formula 1 ladder. The team has nurtured Sandro Nannini, Gianni Morbidelli, Christian Fittipaldi, Alex Zanardi, Giancarlo Fisichella and Jarno Trulli as well as many less talented pay-drivers. Ferrari has often come along and taken the good engineers off to Maranello and has even been known to take away Minardi sponsors (Pioneer being the obvious example). In addition to all this Minardi has had to fight off takeovers from the likes of Flavio Briatore, who still seems to have an ambition to own his own team rather than manage other operations for big companies.

The 2000 season was a crucial one for the team because it had a budget this year which was much bigger than previous years. In 1999 Minardi had a budget of around $22m but this year that rose to $55m with the signing of Spanish telecommunications company Telefonica. The company has now gone Gabriele Rumi who controlled 70% of the team has also departed, taking his Fondmetal money with him. The hole in the Minardi is in the region of $25m. The team can rely on television money from Formula One Management which will be worth about $15m and the team's usual selection of small sponsors will scrape together around $10m more but these two figures will not be enough to pay for next year's engines. Supertec (Flavio Briatore) wants something like $25m although he is no doubt offering the engines cheaper if Minardi gives him equity in the team. Mugen Honda does not have an engine to offer but if it can convince Honda to let them go on playing with the old units, Mugen will be wanting about $25m as well.

And while all these negotiations drag on, the days are passing. It is the first week of November and Minardi does not have a confirmed engine deal for 2001.

For several months the engineers at Faenza under technical director Gustav Brunner have been designing a car without knowing which engine it will be using. This will obviously involve some compromise but it is not as big a problem as other teams might think. The two available engines are about the same size and they are both lower, lighter and narrower than the Fondmetal V10s which the team used this year. This means that the chassis (which was pretty good) can be more or less retained as it is and gains can be made from lowering the center of gravity and reducing the weight of the car. There are some very good engineers at Minardi and even if the Casumaro windtunnel is not as good a facility as people might think, the Minardi package for 2001 could be very good indeed.

What is needed now is an injection of $20m. For that a sponsor will get most of the car, as Telefonica did. The new owners - the PanAmerican Sports Network - is unlikely to be investing that kind of money. It has already paid a lot of money to acquire the right to broadcast the Formula 1 World Championship digital feed in South America. This will have cost at least $10m. Buying Minardi will have cost another $45m.

To the average man in the street these are big figures but for the Dallas-based leveraged-buyout company Hicks, Muse, Tate & Furst, which owns PSN, this is nothing. The company has investments worth $40bn and is constantly buying and selling businesses. Hicks, Muse, Tate & Furst specializes in buying related businesses, creating new value by integrating their operations and then selling or floating the reconstructed companies. Its latest target is Latin American electronic communications and it has invested heavily to acquire TV stations, build up repasts and build broadband networks. It has recently reached an agreement to merge all of its operations with those of United Global Com from Denver, Colorado. This is significant in F1 terms as UGC in the parent company of Arrows's sponsor Chello. It makes sense for Chello to fund Minardi as it will be able to get more space on the car than was the case with Arrows.

Whatever the case, Hicks, Muse, Tate & Furst recognizes the value of Formula 1. One of its other subsidiaries is Mumm champagne and that became the official supplier to Formula 1 this year.

The ultimate aim of Hicks, Muse, Tate & Furst is to build one big South American satellite TV operation under the PSN banner. This will then be floated.

Down at Minardi all this means very little. The team needs to know where the money is coming from.

Everything will be all right if the PSN deal is concluded. There is no point in buying control of a Formula 1 if there are no plans to use it to build up other businesses. So the people at Minardi need not worry. Money will arrive once the deal has been done. And if the deal is not done?

Minardi will probably end up in the hands of Flavio Briatore once again...