🌭 Inflation vs. Costco’s hot dog - The Hustle
The Hustle

🌭 Inflation vs. Costco’s hot dog

Plus: Weekend reads, shower thoughts, baby possums, and more.

According to Morning Consult, 48% of baseball fans support using “robot umpires.” If approved for 2024, calls will be relayed to umps through an earpiece — meaning the aggressive “STEE-RIKE” isn’t going anywhere.

In today’s email:

  • College athletes: Making bank on and off the court.
  • Chart: Costco’s epic hot dog pricing.
  • Weekend Reads for your Saturday coffee.
  • Around the Web: Algebra help, the art of downtime, tracking TV ratings, and more cool internet finds.

🎧 On the go? Listen to today’s quick podcast to hear Zack, Mark, and Juliet talk about the evolution of college athletes getting paid and the enduring power of Costco hot dogs.

The big idea

College athletes are making bank

Rayquan Smith is a record-setter for the modern college sports industry: the self-proclaimed “King of NIL.” 

Smith is a track athlete and football player at Norfolk State University, a historically Black university in Virginia. Since the NCAA changed its rules to allow athletes to cash in off their name, image, and likeness (NIL) last July, he’s racked up 70+ deals with brands — an unofficial record.

Smith is one of many athletes benefiting from a lucrative new world.

For 100+ years…

… the NCAA (AKA National Control-Freak Athletic Association) was thoroughly against athletes benefiting off their fame.

But now deep-pocketed donors at top schools have created “collectives” to help athletes make money from NIL. Individual athletes can do things like monetize their social media followings, appear in ads, or sell their own products (as University of Florida gymnast Leah Clapper has done with her gymnastics board games).

The average Division I athlete made ~$3.7k from NIL last year, per NIL facilitator Opendorse, but a few are making a killing:

  • Oscar Tshiebwe, a star basketball player at Kentucky, skipped the NBA Draft to net ~$2m for another year of college hoops.
  • Haley and Hanna Cavinder, twin sisters who play basketball for the University of Miami, started an apparel company on the strength of their ~5m social media followers.

The Cavinders’ NIL efforts have shattered misconceptions that women’s sports can’t be lucrative. Women’s basketball players have made nearly as much from NIL as their male counterparts, according to Opendorse.

How big will NIL get?

A few months ago, The Athletic reported a high school junior football player signed an ~$8m contract with a school’s NIL collective. In other words: We’re probably just seeing the tip of the NIL iceberg as universities and athletes become more savvy.

The schools may want to use Smith as a consultant. His deals haven’t been worth millions — he told radio host Paul Finebaum they’ve been worth somewhere in the high five figures — but they show remarkable grit.

After getting rejected from 99 of the first 100 companies he contacted, brands now reach out to Smith almost every week.

SNIPPETS

Wow: Amazon says it sold 300m+ items during Prime Day, up from 250m last year. Top sellers included home goods, electronics, and Amazon devices.

Airmageddon: Emirates said it would defy requests to cut daily passenger flights at London’s Heathrow Airport amid a chaotic travel season. The UK government demanded Heathrow’s CEO have a plan for the airport’s staffing problems by midday today.

Beer wars: Molson Coors will run its first Super Bowl ad in 30+ years after Anheuser-Busch declined to renew the category exclusivity agreement it’s had since 1989. Guess that means no more Clydesdales.

Unicorn blues: Stripe, the payments behemoth, cut the value of its internal shares by 28%, lowering its valuation from $95B to $74B. The company didn’t disclose a reason for the move.

Year of the raise: A new survey found US companies are planning the biggest pay bump in 15 years in 2023, with workers expected to get an average raise of 4.1%. Still, that’s less than half the rate of inflation.

(Cry)pto: OpenSea, the preeminent NFT marketplace last valued at $13.3B, let go of ~20% of its staff yesterday, with CEO Devin Finzer citing “an unprecedented combination of crypto winter and broad macroeconomic instability.”

Trailer drop: Amazon released a teaser for its upcoming The Lord of the Rings TV show. The show’s eight-episode first season is estimated to have cost $465m to produce.

Chart

Selina Lee

The ever-reliable $1.50 Costco hot dog combo

Hi, welcome to Costco, where an all-beef hot dog and a soda is always — under threat of death — $1.50.

No, for real. Before Craig Jelinek became Costco’s CEO in 2012, he suggested to then-CEO and co-founder Jim Sinegal that the retailer raise the price of its hot dog combo as they were losing money on it, per Mental Floss.

According to Jelinek, Sinegal said, “If you raise [the price of] the effing hot dog, I will kill you.”

Costco now sells ~130m dogs annually. Had Costco kept pace with inflation, the combo would cost ~$4.13; notably, hot dog prices were up 16% YoY in June.

Costco has made some cost-cutting changes

  • In 2009, amid rising supply costs, it switched from Hebrew National dogs to making its own.
  • When Coca-Cola was about to hike prices in 2013, Costco switched to Pepsi.

But lately…

… inflation and supply chain issues have forced many retailers to rethink their strategies.

For Costco, that’s included raising the price of its chicken bake by a buck and a 20-ounce soda by 10 cents, per Fortune.

But when CNBC’s “Squawk on the Street” asked Jelinek if the hot dog combo was next, he simply answered, “No.”

Why? For Costco, most of its profit comes from its annual membership fee, which may increase. The eternally affordable hot dog combo builds goodwill among those members — and that’s more valuable than a slightly more expensive meal.

Welcome to Weekend Reads — recs to pair with your Saturday coffee. Or Sunday tea. Or Friday rosé.

ICYMI

  • Nearly 50 years ago, one man “invented” the modern smiley face. Then, another man halfway across the world made it into a $500m cash cow.
  • People have had it with swiping left. Now, companies big and small are getting funky with online dating.
  • Multitasking is so last year. Born on TikTok, this startup is using virtual monotasking groups to help people find their flow states, eliminate distractions, and boost productivity.

Spot the fake

AROUND THE WEB

🐦 On this day: In 2006, podcasting company Odeo released Twttr, which allowed users to send short messages to groups by texting 40404. Today, we call it Twitter.

🧮 Useful: Have you ever forgotten all your algebra skills the one time you needed them? Mathway will solve that equation for you.

😴 How to: Want to avoid or recover from burnout? According to psychologist Sabine Sonnentag, there’s an art and science to downtime.

📺 That’s cool: This site charts the ratings of every episode of any TV show. For example, try “Game of Thrones” to see ratings tank in season eight.

🥝 Aww: And now, baby possums enjoying some fruit salad.

Shower Thoughts
  1. “Without Sherlock Holmes the search icon might be very different.”  SOURCE
    SOURCE

  2. “Arguing online is a form of turn-based combat.”  SOURCE
    SOURCE

  3. “The cheapest drug around is sleep deprivation.”  SOURCE
    SOURCE

  4. “Cannibals watch [autopsies] like we watch food shows.”  SOURCE
    SOURCE

  5. “Your favorite song might not be the one you’ve played the most, but the one you’ve skipped the least.”  SOURCE
    SOURCE

 
via Reddit
How did you like today’s email?
Today’s email was brought to you by Jacob Cohen, Juliet Bennett Rylah, and Rob Litterst.
Editing by: Mark “Joey Chestnut of Costco” Dent.

Was this email forwarded to you? Sign up here.

PODCAST JOBS CONTACT US
25 FIRST ST. 2ND FLOOR, CAMBRIDGE, MA 02141, UNITED STATES   +1 888 482 7768
Never want to hear from us again? Break our hearts and unsubscribe.

Get the 5-minute roundup you’ll actually read in your inbox​

Business and tech news in 5 minutes or less​

Exit mobile version