You can't really do it with a spinner.
The original used TWO encoder wheels to maintain sync.
The first wheel is the standard Tron type, and is used to let the CPU know how fast, how far, and in what direction, the stick is spun.
The second wheel lets the CPU know when the stick passes the "home" spot.
See
This Page for just about everything you need to know about 720 controls.
The best alternative I've been able to come up with is a Saitek analog joystick that I massacred awhile back for the handle.
I had already removed the handle, and on a whim one day, I removed the centering spring as well.
This lets the joystick rotate around the perimeter like the original 720 stick, without returning to center.
The direction of the analog stick is translated by MAME to let the game know which direction to point your character.
It's not as good as the original controls, but is very playable--and a WHOLE lot cheaper.