More on the cheating Pats and Belichick's take on J. Edgar Hoover and Nixon

So I wrote about how I didn't think this whole Pat's cheating scandal was that big a deal here. Well here's a completely different take on it from one of my favorite football columns, Tuesday Morning Quarterback, written by Gregg Easterbrook. While I think he goes a little bit overboard, especially because I believe the heart of the NFL's popularity is how its rigid salary-cap and profit-sharing system maintains parity, Easterbrook raises some scary rumors about Belichick.

And the Patriots' cheating might have been more extensive than so far confirmed. Fox Sports reported that former NFL players believe Belichick had microphones installed in the shoulder pads of defensive linemen so the Patriots could tape other teams' offensive audibles and line calls. Needless to say, putting microphones on players violates NFL rules. Andrea Kremer of NBC reported that several teams might charge the Patriots this week with having stolen playbooks from the visitors' dressing room. The convenient "malfunction" of visiting teams' headphones at the Patriots' two fields under Belichick seems to have happened far too often to be an IT department error. The rumor mill says Belichick, Richard Nixon-style, has file cabinets of info on opposing coaches and assistant coaches – some gleaned honestly, some obtained by cheating.

That last bit sounds like Hoover to me, hence the title. Anyway, read his article, I'm beginning to feel myself shifting camps here.

Patriots 'cheating'

Ok, so many of my friends will think that I am probably going to go off here about the Patriots' camera incident last weekend, but I frankly don't think its a big deal. I mean, coaching signals are coded for a reason, we worried about it in high school! Second of all, a certain amount of gamesmanship is expected in football, especially at the highest level. Finally, their has been a certain elevated hysteria in the discussion about this video taping of the Jets' signals, including most headlines with "spying" in them. As noted by King Kaufman from Salon:

What the Pats are accused of doing is "spying" on the Jets coaches as they sent signals to the defense. My understanding of spying must be different from the NFL's. Watching a guy flapping his arms while standing in the middle of 70,000 people and in front of a national TV audience doesn't qualify. Even if you point a camera at him.

I agree. The original offense on the face of it seems not that big a deal.

I also question whether it would work. I already assume that all teams change their coding every game, and simple protective systems rotating every series should defend against even videotaping. They could have a two-signaller system. You have two coaches doing slightly different signals, but each series only one coach is giving the real signal (which the defensive captains already know), while the other sends in a similar dummy. Then in the second half, you use different coding, and still use the same two-signaller system. All the work done cracking the first-half code is useless. Shouldn't teams be using this anyway?

On the other hand, the Pats stand accused of specifically being warned about this offense. Check out what nlf.com has to say:

Patriots under investigation for following rules, guidelines violations ... 1. Page 105 of the Game Operations manual says: "No video recording devices of any kind are permitted to be in use in the coaches' booth, on the field, or in the locker room during the game." It later says: "All video shooting locations must be enclosed on all sides with a roof overhead."

2. And, a memo from Ray Anderson, NFL head of football operations, to head coaches and GMs on Sept. 6, 2006 said: "Video taping of any type, including but not limited to taping of an opponent’s offensive or defensive signals, is prohibited on the sidelines, in the coaches’ booth, in the locker room, or at any other locations accessible to club staff members during the game."

There aren't really any two ways about that (by bolding). While I don't think their was any major effect of the taping, including even in the Jets game (I expect Tom Brady and Randy Moss will continue to torch opponents all season long; and as noted above, there are easy measures which seem to me like they could frustrate reading defensive signals), it is a rather blatant violation. The Sports Guy has a discussion with Aaron Schatz from Football Outsiders with a long bit of Patriot fan self-loathing, that I think even goes over the top a bit, but this bit struck me as true:

Here's the thing that shocks me: I always thought Belichick cared too much about his legacy to risk tainting it like this. He's a history buff and someone who allowed Halberstam to follow him around simply because he understood the intrinsic value of a great writer capturing his 'brilliance' in a widely read book. The whole thing is just bizarre.

Why oh why did the Pats do it? Especially since it seems to me particularly easy to defend against (just rotate between dummies rapidly and irregularly; or worst comes to worst, simply sending in the play call with a player). And they had already been warned? As Schatz put it:

What on Earth was Belichick thinking? The team had been warned by the league multiple times. They were playing the Jets -- did they think Eric Mangini had suddenly forgotten everything the Patriots had done when he was their defensive coordinator? Could you guys be a little more obvious with your cheating?

The crime seems irrelevant, and barely qualifies as cheating to me. The very act of trying to crack another team's signals is still considered sacred; nobody is disputing a team's right to have five guys staring at the other coaches writing down all their signals on a clipboard. Video might make it more effective and faster, but it is only a matter of one level of magnitude, and still the same act (cracking the other team's signals). So really it comes down to breaking the limits on rules, which seems hardly less ethical, just stupid. Petty, minor, irrelevant, stupid. But everyone is getting way to worked up about it I think.

FDA shuts down company for illegally marketing their product as a drug....nice

Well, this is exactly what it is designed to do, grats to the FDA. From here:

The U.S. Food and Drug Administration (FDA) has issued a Warning Letter to Brian Manookian, owner of Melanocorp, Inc. in Hendersonville, Tenn. for the illegal sale and marketing of the product Melanotan II, which is not FDA-approved, on Melanocorp's Web site.

The website www.melanocorp.com is currently a blank page. Luckily we have the internet wayback machine.

The FDA letter is here. A great read. Essentially, they got nailed for saying their product was a drug, but more than that, by saying it was a NEW drug. Looking through the archive above, you can see they claimed it worked when it was "not generally recognized as safe and effective for its labeled uses"(fda words, great phrase).
But the FDA letter is worth a read more because it is so harsh, and they clearly dont believe the company have any valid claims, and have any chance of recovering.

Within fifteen working days of receipt of this letter, please notify this office in writing of the specific steps you have taken to correct violations . Include an explanation of each step being taken to prevent the recurrence of violations, as well as copies of related documentation. If you cannot complete corrective action within fifteen working days, state the reason for the delay and the time within which you will complete the correction. If you no longer manufacture or market Melanotan II, your response should so indicate, including the reasons, and the date on which you ceased production.

That bold part is my favorite. they're saying, "If this letter caused you to shut down, let us know". The height of FDA bureaucratic arrogance, however, and frankly hilarious to me, is the very last paragraph in the letter, which I feel is kind of like "ok buddy, nice try. If you want to make a real drug, you can learn all about that online at this website or write to these kind folks and they'll answer your questions":

A description of the new drug approval process can be found on FDA's internet website at http://www.fda . ,gov/cder/rep-ulatory/anplications/default htm . Any questions you may have regarding this process should be directed to the Food and Drug Administration, Division of Drug Information (HFD-240), Center for Drug Evaluation and Research, 5600 Fishers Lane, Rockville, Maryland 20857 .

Lies everywhere

I ran across two completely unrelated, yet seemingly identical instances of data manipulation recently that I thought I would call out.

The first, from the NYT, suggests that the Pentagon and Bush Administration revised upwards the casualty totals from last winter, to retrospectively show a decline in violence during the much ballyhooed Surge-that-will-win-the-war (who the f calls a military strategy a surge? Eisenhower or Roosevelt would've laughed in his face).

"There were significant revisions to the way the Pentagon’s reports measure sectarian violence between its March 2007 report and its June 2007 report. The original data for the five months before the surge began (September 2006 through January 2007) indicated approximately 5,500 sectarian killings. In the revised data in the June 2007 report, those numbers had been adjusted to roughly 7,400 killings – a 25% increase. These discrepancies have the impact of making the sectarian violence appear significantly worse during the fall and winter of 2006 before the President’s “surge” began."

Another example comes from the publicly reported filings of Overstock.com, which have been analyzed by Sam Antar, reformed white-collar criminal. Overstock has been engaging in similarly sketchy machinations, this time with its inventory. In accounting, you track the value of your inventory-on-hand by estimating the lower of two numbers: either its cost, or its current market value. IF you don't sell your inventory, and it sits around and becomes unfashionable etc., then your inventory reduces in value. Typically companies will institute 'inventory reserves'. I'm going to use Sam's example:

In the first quarter, a company buys merchandise for $120, its books and records will reflect $120 of inventory.

In the second quarter, the company, under GAAP, reduces the value of its merchandise by increasing inventory reserves by $50 to reflect diminished future demand and market conditions. Therefore, in the second quarter, the company reduces its gross margins by $50. The net inventory book value on its balance sheet is reduced to $70 (original cost $120 less $50 inventory reserves).

In the third quarter, the company sells the merchandise for $90. Since the net value book value of the merchandise was previously reduced to $70, (as a result of taking a $50 reserve against its original purchase price of $120 in a previous quarter), the company recognizes gross margins of $20 (Sales $90 minus net book value $70).

The company, under GAAP, had gross margins of $20 in third quarter after selling the previously written down inventory. It would seem on its face to be an improvement over the reduction of gross margins by $50 in the second quarter resulting from the inventory write down. However, in reality the company lost $30 on its merchandise. The original cost of the merchandise was $120 and they sold it for $90.

Therefore, taking inventory reserves increases future gross margins.

Sam has put together a 3-part post (warning, pretty technical part 1, part 2, part 3) on the sleight-of-hand being done by the company behinds the scenes. In recent conference calls, the Overstock.com company executives have been touting their recently high margins. Well, as is convincingly demonstrated by Sam, overstock.com cooked the books by taking too many inventory reserves in previous quarters, which reflects positively on margins when they actually sell the inventory in later quarters, but is still a net loss for the company. Sound familiar? Like...maybe what the Bush Administration just did?