Gladwell, Spurs, Capitalization Rate

by Timothy Varner

Malcolm Gladwell, talking with Bill Simmons:

What we’re talking about is what are called capitalization rates, which refers to how efficiently any group makes use of its talent. So, for example, sub-Saharan Africa is radically undercapitalized when it comes to, say, physics: There are a large number of people who live there who have the ability to be physicists but never get the chance to develop that talent. Canada, by contrast, is highly capitalized when it comes to hockey players: If you can play hockey in Canada, trust me, we will find you. One of my favorite psychologists, James Flynn, has looked at capitalization rates in the U.S. for various occupations: For example, what percentage of American men who are intellectually capable of holding the top tier of managerial/professional jobs actually end up getting a job like that. The number is surprisingly low, like 60 percent or so. That suggests we have a lot of room for improvement.

What you’re saying with the NBA is that over the past decade, it has become more and more highly capitalized: There isn’t more talent than before, but there is — for a variety of reasons — a more efficient use of talent. But I suspect that in sports, as in the rest of society, there’s still an awful lot of room for improvement.

This isn’t the first time Gladwell has written something that provided a window of insight into the Spurs. In many ways, seeking an optimum capitalization rate is a quick tutorial in how Buford and company operate. One could come at this from multiple angles, so I’ll tease you in a few directions rather than overstating the point.

Gladwell makes a case of Peyton Manning, but it could just as easily apply to Tim Duncan. He writes:

Case in point: Everyone always says what an incredible advantage it has been for Peyton Manning to have had the same offensive coordinator and the same offensive system his entire career. Football offenses are so complex now that they take years to master properly, and having one system in place from the beginning has allowed Manning to capitalize on every inch of his talent. On the other hand, someone like Jason Campbell has had a different offensive coordinator in virtually every season of his pro and college career (and I’m guessing he’ll get another this offseason).

This is what Gregg Popovich likes to call “corporate knowledge,” and the Spurs value it like miners value diamonds. A lack of corporate knowledge is the major obstacle standing between the current Spurs team and their next championship, and Popovich knows it. Past Spurs squads were better defenders because their corporate knowledge allowed them a higher capitalization rate, despite less youth, athleticism and talent. The advantage of being the oldest team in the league is, perhaps, that the talent assembled will capitalize on the team’s schemes at a higher rate than a collection of more talented but system-ignorant newcomers.

As a small market team, the Spurs have done more under the restraints of the salary cap than the rest of the league; Popovich has consistently squeezed more production from players like Bruce Bowen than anyone thought imaginable; the front office has found ways to get more out of the draft than most, if not all, of their opponents (relatively late selections of Ginobili, Parker, Splitter, Blair and Hill, as examples), and their investment in the Austin Toros (including the once passed-over coaching talent Quin Snyder) is nothing if not an adventure in converting under-realized talent into NBA production.

The comparisons don’t work in every way, but the Spurs have had one the best capitalization rates in all of sports over the last decade.