Thursday, September 13, 2007

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There's spying and then there's, you know, spying

New England Patriots Bill Belichick was fined $500,000, and the Patriots were fined $250,000 and some draft picks for spying on the New York Jets defensive signals during last week's game.

What's interesting about this is that it's not even close to the biggest sports fine levied yesterday. No, for that we have to go to Formula One racing. The New York Times' Brad Spurgeon explains:

McLaren Mercedes, the leading team in the Formula One championship, was fined $100 million Thursday and excluded from the constructorís title in connection with the spying scandal that has plagued the sport all season.

The International Automobile Federation, the sportís governing body, found McLaren guilty of cheating by using data obtained from Ferrari, its main rival, to improve its own car, the federation said in a statement issued following a hearing in Paris....

It was the harshest punishment given to a team in the 57-year history of the sport.

The federation, known as F.I.A., said it had stripped McLaren of all its constructorís points in the Formula One world championship, and the team can score no points for the remainder of the season.

F.I.A. added that the team would not share in the sportís revenue this season, either....

The spying scandal broke in early July, when Ferrari accused McLaren of using data given by a Ferrari employee to a McLaren employee to improve the quality of its racing car. The police had found documents regarding the Ferrari car at the home of Mike Coughlan, McLarenís technical director, in England. Ferrari said it thought its former employee, Nigel Stepney, who had been frustrated by organizational changes at Ferrari this season, had provided the information to Coughlan.

A question to the three people in the known universe who are acolytes of both Formula One racing and the National Football League: While even I can determine that McLaren's actions were more egregious than Belichick's, were they 200 times as egregious??

posted by Dan on 09.13.07 at 11:44 PM


Stealing signals is as old as baseball. There's nothing special about it, and the only reason the Pats got fined at all is because it was technically against the rules to do it the way they did. (According to those in the know, that rule is intended to apply to electronic eavesdropping in locker rooms and other places the opponents have a reasonable expectation of privacy.)

What the McLaren team did really is 200 times worse. It's illegal, too. The $100M charge is comparable to what they would be fined in court for that kind of corporate espionage.

posted by: pete on 09.13.07 at 11:44 PM [permalink]

Does a F-1 racing team *have* a 100 million dollars?

posted by: Heath White on 09.13.07 at 11:44 PM [permalink]

Jeez, maybe they could do this to Nascar and fine it out of exisstence? It didn't work with the tobacco companies but it did with Arthur Andersen, and I'll go with a 50% rate of success.

posted by: Gene on 09.13.07 at 11:44 PM [permalink]

Consider the context. Formula One racing is entertainment of, by and for rich people only; American football may be a sport mostly of and by rich people, but it is for everyone. So the fines for misconduct reflect that.

posted by: Zathras on 09.13.07 at 11:44 PM [permalink]

It is useful to read the European papers on this one (and to see F-1 races for yourself). You can learn two things:

1. Formula One is positively not for rich people only.
2. This is a deal long negotiated and aimed at keeping McLaren in business. No one cares about the constructor's title anyway and this is a nice lesson in how to sell a slap on the wrist as "harshest punishment ever."

posted by: Marvvvin on 09.13.07 at 11:44 PM [permalink]

Heath White must live in the US. Formula One doesn't have much of a fan base over here, but is the main motor sport in the rest of the world (the only one that matters in most places.) They have vast amounts of money pumped into the sport from wealthy team owners, but also from investors in the Middle East and Japan. Bear in mind that until he retired last year Michael Schumacher was the highest paid sportsman in the world making something like $60 million per year.
The difference here that strikes me is that while $500,000 is presumably a big hit for Belichick, $250,000 is not a very big deal for Robert Kraft. Sure it will hurt in the short run, but given the size of his companies it doesn't hurt him too much. The goal of the NFL was to stop coaches from doing this in the future - I'd guess that if it happens again the fine for the coach will be more than $500,000.
The same goal is obviously motivating F1 and given the financial stakes involved the fine, while large, was probably the only way to acheive this goal. Bear in mind that there is still the option for further punishment for McClaren if the car that they design for next year is deemed to have incorporated some of the results of their spying on Ferrari.

posted by: Mark on 09.13.07 at 11:44 PM [permalink]

Let me echo what Marvvin said about F-1. It is hugely popular in Brazil among rich and poor, that nation having produced a number of famous drivers. I remember when when Ayrton Senna died. The borders were closed in his honor. You should see the number of places named after him there.

Dan, the question is not wheteher they were 200 times more egregious, it's whether Belichick's were 200 times less egregious. They weren't IMHO.

posted by: Randy Paul on 09.13.07 at 11:44 PM [permalink]

The F1 situation is a little more complicated than that, I think. With the caveat that 1) I've only watched for the past 5 years or so and 2) I'm a McLaren fan (but only after Montoya switched from Williams-BMW a couple years ago), here's my take.

As I understand it, the information they obtained was not used to improve this year's car. In addition, teams regularly hire technicians and engineers and drivers from other teams, and while they're not supposed to reveal technological secrets, everybody knows that they do.

So it seems to me that it's the kind of things that goes on all the time but nobody calls anybody on it because everybody is guilty of it (at the very least, Renault, the two Red Bull teams, Honda, Toyota, and Spyker) -- and plus that nobody knows how the heck they could enforce this consistently and still have a sport.

And indeed, the only reason it was enforced here was because Ferrari has an inordinate amount of political power with the FIA. You think the Yankees are dominant? Ferrari is many, many times that. Their fan base is ridiculous, and they've often credibly threatened to break away from F1 to form their own league.

So, to be sure, McLaren did cheat, and a punishment was called for. But no, I don't think the punishment here fit the crime.

BTW, didja know that the only way to posts comments was via the pop-up window on the main page? Posting from a post's permalink page doesn't work.

posted by: fling93 on 09.13.07 at 11:44 PM [permalink]

F1 is the most watched sport around the world (only second during the world cup). The story in the NYtimes doesn't do justice, just a brief summary and as one person commented you really need to read the papers overseas to get a good take on the events...

posted by: RH on 09.13.07 at 11:44 PM [permalink]

The fines to Belichick and the Patriots are the maxmum allowed by the NFL's own rules, so it doesn't make sense to compare it to McLaren's fine; in all likelihood they would have been bigger if there wasn't a cap on the penalty.

posted by: Hei Lun Chan on 09.13.07 at 11:44 PM [permalink]

Seems like the broadcast team of SpeedTV agrees with me, for what it's worth.

My Law & Economics professor is a fellow F1 fan, so I'm sure we'll be discussing this in relation to intellectual property rights in class. Unlike for patent and copyright, the sport cares more about closer competition than innovation (note that many other racing leagues have all the drivers race cars of the same or similar specifications). And indeed, many people stop watching when Ferrari was winning championships with the season only half over.

So it's not clear that cracking down on this sort of thing is in the sport's interest. The incentive to keep moving ahead of the other teams (including the ones that are copying you) should be sufficient.

posted by: fling93 on 09.13.07 at 11:44 PM [permalink]

Two points:

The FIA no doubt felt compelled to observe Ferrari sensitivities: Ferrari is not just another team. It is a political heavyweight in its own right.

McLaren wasn't doing this casually. It had an "agent" working in Ferrari and was actively tasking the agent to gather what information it sought. It did this systematically, on an ongoing basis. This was a caper worthy of the KGB, not some idiot with a camera sitting on the sidelines.

posted by: Jim Harris on 09.13.07 at 11:44 PM [permalink]

Incidentally, McLaren's annual budget is some $300-400 million. I ran aross this data

Total $2,141,100,000
$443,800,000 Ferrari
$353,300,000 Williams
$304,600,000 McLaren
$290,400,000 Toyota
$225,100,000 BAR
$206,800,000 Renault
$119,500,000 Sauber
$ 79,200,000 Jordan
$ 78,800,000 Jaguar
$ 39,600,000 Minardi

posted by: Jim Harris on 09.13.07 at 11:44 PM [permalink]

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