Is sport using its human capital effectively?

Many countries are spinning their wheels when it come to capitalizing on their sport talent

The idea for this letter came from a video of Malcom Gladwell giving a talk at Microsoft in 2012. Gladwell takes complex issues and spins them in different and interesting ways.

Rarely does the term human capital get mentioned in discussions of sport development. It's usually found in analyses of institutions vital to the stability and future of a country like economics, education, or health. But sport is also a social institution and the success of a country's sport efforts in international events like the Olympic Games depends on many of the same factors affecting a country's other institutions. Strategies and methods used to strengthen an economy or an educational system can also be used to build and improve a country's sport performance.

Athletes, especially young athletes, are the primary resource in any country's sport industry. They are the people who learn and gain experience in their sports, not only in performing the skills involved but eventually how to teach them, coach them, and evaluate them. You don't have to be an athlete (or former athlete) to coach a sport but it certainly helps. And while sport administrators bring a variety of skills to the table, having a background as an athlete adds to the depth of their knowledge.

Table 1 shows the current top twenty countries in Tokyo based on a 5-3-1 (gold, silver, bronze) points system instead of medals. For the analysis in Table 2 all 88 countries that have won medals up to this point were included in the correlation analysis. As I write this the Games are not finished but I don't expect the numbers to change much in the final analysis. Table 2 represents correlation between the variables listed in Table 1 and overall team success (so far). There are probably better ways to evaluate capitalization in individual countries but this provides a simple example with contemporary data.

Table 2 shows a strong positive correlation (values highlighted in red) between points scored, team size, and gross domestic product (GDP), and a moderate correlation between points scored and population. This suggests that sport success is more likely to happen in developed countries. Who would have guessed, right? Other than that somewhat obvious result there aren't any other meaningful relationships. 

The population and points relationship is probably one of the oldest connections that many make when it comes to national sport success. Countries with larger populations are able to pick and choose the best athletes from their development systems. This may be true in theory but it assumes that all countries have development systems and all are equally capitalized in terms of social interest, infrastructure, coaching, governance, and other factors that help build and sustain efficient development. This isn't the case. Some countries have highly capitalized sport infrastructures, others do not.

Varying capitalization rates for sport are often dependent more on social needs than on the effectiveness of sport development plans. It is hard, for example, to capitalize an athlete pool in a country with a high poverty level. Sport is a second tier social need. Once the basics are provided for then the emphasis can shift to a capitalized sport system.

Stating it this way is somewhat misleading though. Sport development is not so much a result of direct action as it is organic; a natural evolution in societies with higher incomes and more leisure time. Exceptions to this have succeeded in directed economies such as the Soviet Union. But when the Soviet economy failed, its sport system, which was a result of direct action at almost all levels, collapsed along with the rest of the country. Direct action might work for a while but it is not sustainable. Effective capitalization efforts come down to understanding the difference between direct action and organic development.

Role of the NGB: "That government is best which governs least"

National sport governing bodies are naturally focused on elite performance, but the path to success is not as straightforward as a casual observer might think. For example, USA Swimming has over 400,000 registered athletes of which only 52 get to represent the United States in the Olympic Games. Why have so many registered athletes if so few are needed to field a national team? Because while a country's national level athletes may steal the show when it comes to public interest in a sport it is the 400,000 athletes who are not on the Olympic team that are the strength of the country's swimming efforts. This is where the U.S. Olympic swimmers come from. This is the athlete pool where the next U.S. team will come from, and the one after that. 

Taking a tip from Thoreau, NGBs would be wise to nurture the athlete pool by making it easier for clubs to develop their athletes and using soft power to control the sport's infrastructure rather than taking a direct role in their training.

For example, in Malaysia some NGBs have become 'super clubs' by harvesting the best athletes from around the county and placing them in a centralized training situation. This may help a small number of athletes but it harms a large number of clubs. What motivation do clubs have to produce top level athletes if they are only going to be lured away by the NGB when they succeed? In my opinion this is a large part of the reason why Malaysia has a bare minimum of elite level performers. Malaysia shines in terms of investment in sport science, coaching, and facilities but there is practically no development system backing it up.

Instead of placing top athletes in exclusive training programs run by NGBs it is better to leave them where they are and let them grow where they are planted, so to speak. There may come a time when it makes sense for athletes to change training situations but this suggestion should not come from the NGB. NGBs should administer the sport, not train the athletes. 

Sport capitalization is an organic process involving savvy governance that encourages and rewards innovation and eliminates undue restrictions. It involves various contexts and groups within the sport. Some may be recreational, some are based in education, others are focused on high performance. Athletes are the product of a country's sport system, so effective capitalization of sport involves developing a large and effective group of athletes. 

Capitalization applies to “…abundance and scarcity as it applies to people.” More specifically, Gladwell sees “capitalization” as “the rate at which a given community capitalizes on human potential… what percentage of those who are capable of achieving something actually achieve it.”

Develop a robust club system

Capitalization, according to Malcolm Gladwell, refers to "... the rate at which a given community capitalizes on the human potential… What percentage of those who are capable of achieving something actually achieve it?” NGBs often fashion their organizational structure around goals of producing elite performers. This includes coaches training, facilities, competitive schedules all designed to produce top athletes for the country. But before it's an elite training program it's something else, something quite different from high level sport.

This is why sport clubs are important. Butterflies are caterpillars first. There is nothing about the caterpillar that indicates that soon enough it will become a butterfly. Good sport development programs don't look much like their elite big brothers. But they are still a vital part of a country's international sport effort. Sport clubs train a lot of caterpillars knowing that someday, given the time and attention they need, their athletes will become the sport's butterflies. NGBs should think of ways to make it easier for this to happen. This is where the large and effective pool of athletes comes from. It's not created by the NGB, it's created by clubs.

Avoid artificial elimination of athletes 

The athlete pool is an NGBs most valuable asset. Unfortunately many athletes leave sport prematurely. Reasons for this vary and not all of them are preventable but NGBs should develop strategies that make their sport attractive enough to young athletes so that they are encouraged to stay in the sport long enough to make a difference.

I've written about the importance of retention before. NGBs need to reduce or stop practices that may inadvertently eliminate athletes for no real reason. This includes mitigating the relative age effect and reducing maturity bias wherever possible, and discouraging the artificial elimination of athletes when 'select' teams are formed or additional training is offered.

Artificial elimination or 'cutting' athletes from a team is widely seen as a normal part of sport. With older athletes at state or national levels this may be true, but with younger athletes it is wildly inappropriate and serves no good purpose for the athlete, club, or NGB. As I have noted many times in other articles no one can know if young athletes will ever become elite performers. They need time to develop. Eliminating young athletes from selection for advanced teams or additional training is counterproductive to what coaches, clubs, and the NGB itself needs. This practice only exists because it happens at higher levels of performance and is considered 'part of the sport'. This thinking needs to be changed. 

Creating a sport capitalization index

Can you think of ways sport systems can be evaluated? I've written about the SPLISS factors previously but many of these depend on in-person evaluation. Is there an easier way to determine how NGBs are using human capital and if it's effective? If you have ideas please share them. Perhaps we could develop a sport capitalization index.