Starting Tuesday this week, all the major players in the Yahoo-Microsoft-Everyone-And-Their-Mother circus will line their private jets up in Sun Valley for the high-powered 26th annual Allen & Co. confab of tech and media moguls.

Specifically, that would be bigwigs from Microsoft (Co-Founder Bill Gates, deal guy Hank “Hankrosoft” Vigil), Yahoo (CEO Jerry Yang and President Sue Decker), News Corp. (Chairman and CEO Rupert Murdoch), Time Warner (CEO Jeff Bewkes, who runs the conglomerate that owns AOL), as well as Google (the three amigos: Co-Founders Larry Page and Sergey Brin, along with CEO Eric Schmidt).

It could be like that five families sitdown in the “Godfather” movies, except none of the parties can even seem to metaphorically whack each other, as the Yahoo saga drags on interminably.

While BoomTown’s invitation seems to have been lost in the mail–Herb Allen Trois, what gives, Walt and I invited you to our conference! We’re too mean for your pampered poobahs, right?–so we can’t give you an on-the-ground report.

But the Allen & Co. event might be the perfect place to finally make a deal–any deal–this situation surely needs.

So to help, here is BoomTown’s unsolicited advice for the players of this messy mess.

YAHOO: Clearly, Yahoo (YHOO) needs a big break from the drama–and a good first step is to stop its own silly deal-making antics.

First off, the company needs to stop leaking about an AOL merger deal, because it has a been-there-done-that quality that now looks more like a way to look busy.

But it remains a bad idea and feels desperate and employees still don’t like it.

More to the point, there is probably only one true option right now–Yahoo needs to quickly make a deal with Microsoft to outsource its ad search business and/or ad search business.

In addition, spinning in assets from News Corp. (NWS), like MySpace, is not the worst idea and could be a way to juice up social networking on the site.

After all, more top Yahoo employees will soon be headed out the door, unless there is a significant change of direction and, probably, leadership soon.

MICROSOFT: Oh, get over it.

Microsoft (MSFT) is not going to catch up to Google (GOOG) without Yahoo’s search share and that’s that.

It’s not going to be able to grow it organically (Project Granola!), it’s not going to get there with AOL and it’s not going to get there wishin’ and a-hopin’ Google will stumble.

At this point–though it seems juicy to wait as Yahoo’s shares drift downward and as the company moves to its annual meeting and a likely ugly proxy fight with activist investor Carl Icahn looms–waiting is a mistake as it only damages an asset Microsoft should value.

While Microsoft and Yahoo are periodically talking, they also periodically get in snits with each other–the latest due to Microsoft pique over Yahoo’s posting of a regulatory presentation dissing the software giant (see one such slide below; click on it to make it larger).

As I said, get over it.

NEWS CORP./AOL: Make a deal, any deal.

While News Corp. (owner of Dow Jones and of this site) wrinkled its nose over Yahoo’s one-time offer of $4 billion for MySpace (it wanted $8 billion), despite a commitment by News Corp. of also investing $3 billion in Yahoo, if it should do all it can to spin its social networking site out.

Why? With Facebook pressing on MySpace’s momentum, a pending new music service that could use Yahoo’s massive traffic and the plus of being an independent company to compete better, such a move for News Corp. makes a lot of sense.

For AOL, a need for a deal is clear–a dwindling property with some good assets that cannot and should not live within Time Warner. If it gets anywhere north of $8 billion, Time Warner (TWX) should jump at the chance.

GOOGLE: It’s in Google’s best interest to keep the soap opera going, of course. As this situation has developed, it has only underscored exactly how dominant the search giant is.

And, more importantly, just how dangerous to all the rest gathered there Google truly has become.

So, if Larry, Sergey and Eric offer to help the other players work it all out over a roaring campfire, they should all consider themselves warned.

Please see this disclosure related to me and Google.

According to numerous sources familiar with Microsoft’s thinking whom I have been talking to this past week, quite a lot–from creating a single search index to forming one common ad platform to running the place with longtime Microsoft execs at the helm.

So let’s just ignore for now the latest wrinkle in this obviously dysfunctional relationship between Yahoo and Microsoft–which is beginning to remind me of that bizarre Charlie Brown, Lucy Van Pelt and football situation.

That’s because once again (and, as it has apparently done over the last year secretly, until Microsoft finally went hostile 10 days ago), Yahoo’s board is expected to deliver another no-thank-you-very-much-for-now in answer to Microsoft’s latest bid–this time a $31-per-share offer.

Fine, fine. We all know this is going to grind forward agonizingly, as investment bankers parry and various scenarios are bandied about (including here in excess, we can assure you!).

And, of course, there will be possible other merger partners leaked. On today’s menu: AOL! Having written two books about the even-more-troubled-than-Yahoo Internet outfit, here is my official response: Yuck.

Thus, to be more helpful, it might be better to focus on some things that might happen if the software giant ever got the keys to Yahoo.

Let’s be clear–nothing has been formally decided by Microsoft brass as yet, but there are some interesting ideas to be found in the planning they did before they prepared the offer, which can give one an outline of their plan if they won.

It’s important to think about, because exactly what Microsoft would do to Yahoo is probably something that Yahoo’s board, executives, employees and others would probably like to get a sense of as it considers what it should do.

First, we already know Microsoft will keep the Yahoo brand name, per public declarations by Microsoft CEO Steve Ballmer. This is kind of a no-brainer, especially when it is compared to the lackluster MSN. (Historical footnote: The code name for MSN was Marvel, which was a much better moniker still!)

Most sources familiar with Microsoft’s thinking could not agree more. One noted that Yahoo was clearly the best brand, but said Microsoft would likely remain “open-minded about what happens to the rest of the MSN-branded names.” Expect Window Live products to have the best chance of survival.

Also on the PowerPoint slides, which Microsoft execs have only vaguely referred to as cost savings, is the consolidation of the search indexes and technology of Yahoo and Microsoft into one product. Signs lean toward Microsoft here, as some of its execs have even publicly insulted Yahoo’s efforts in this arena.

Frankly, neither should be bragging much, given how badly they both lag behind Google, but Microsoft is better equipped from an engineering and power programming point of view to dominate here.

That also goes for the consolidating of the ad platforms, both for search and display. Even though Yahoo dominates the display market, Microsoft considers its recent acquisition of aQuantive to be the driver of this arena, rather than Yahoo’s technology and new purchases like BlueLithium and Right Media.

In both the ad and search efforts, sources said that Microsoft would split engineers between those who work on improving and running the core existing products and another group who will be focused on pushing to incorporate new innovation.

That would include trying to figure out a recent project Yahoo is currently undergoing, which inside sources call a “lugubrious” overhaul of the technology related to its display business. It’s comparable to its ill-fated Panama search-ad fix, a multiyear project Microsoft would probably be inclined to want to make sure is staffed by its own execs.

In that regard, if Microsoft ever prevails, Yahoo better be prepared to meet the parents.

They will be running the Yahoo show and would include Microsoft execs, pictured here, such as:

Brian McAndrews, former aQuantive CEO and now Microsoft’s SVP of its Advertiser Publisher Solutions Group, who is a rising star and would surely play a key role in all ad efforts and coordination.

Satya Nadella, corporate vice president of its Search and Advertising Platform Group, the engineering head whom BoomTown will now dub, “Mr. Search and Destroy,” because he would likely lead all efforts to use Yahoo’s assets to catch Google. (Good luck with that one, Satya!)

Yusuf Mehdi, SVP of Strategic Partnerships, who has been in and out of the MSN businesses many times and is one of Microsoft’s better-known Internet execs outside the company, and who has played an important role in this bid.

And, of course, Kevin Johnson, president of Platforms and Services Division, who runs quite a swath of the company. Besides Ballmer, he is probably the most important player in this effort to turbocharge Microsoft with Yahoo power.

That is, except for Hank Vigil, SVP of Strategy and Partnership, who has worked closely with Ballmer on this deal and also big moves like the recent $240 million Facebook investment. Vigil is not high-profile in any way, but he feels a lot like Zelig in his clearly important presence in a lot of Microsoft’s more bold initiatives.

One major Web exec who will not be part of the hunting party is Steve Berkowitz, SVP of the Online Services Group, who is finally on the way out, as has been long rumored. Sources said his change of status as a major Web player at Microsoft has been communicated to many top execs at the company last week. But it is not clear whether the former Ask.com CEO will leave Microsoft or get another job at the company.

In fact, many a Microsoft Web exec has mysteriously disappeared into the bowels of the company, never to be seen again, so Yahoo execs: Beware!