Spice World

0:10Hello and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg. I'm here with Elizabeth Spiers of New York Times. Hello. And I'm here with Emily Peck of Axios.

0:24Felix Salmon: Hello, hello. Please subscribe to Axios Markets. And we are going to talk about markets this week. We're going to talk specifically about equity markets, public and private, and the insane amounts of cash that they seem to be able to direct towards AI companies and whether this is a good thing or not. We are going to talk about a massive$69 or$45 billion merger, depending on how you count, between McCormick and Unilever Food. We are going to talk about WNBA. we're going to talk about women making more money for playing sports which of course they totally should do we are going to have a slate plus segment about the most expensive house ever sold in the history of houses so stay tuned it's all coming up on slate

1:39Felix Salmon: We'll see you next time. a small business, tax season can feel overwhelming, especially if you're doing it all on your own. TurboTax Experts for Business is here to help. They match you with an experienced expert who understands your industry and works with you to save money by finding every deduction and maximizing your savings. They're there to help you every step of the way, virtually or in person, to help you prepare and file your taxes. Plus, you get unlimited year-round tax support at no extra cost along with audit protection and seamless integration with other Intuit tools like QuickBooks.

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2:25Okay, so I want to start off by telling a little story. Once upon a time, there were these things called unicorns. You might remember unicorns. Unicorns were private companies that had a$1 billion valuation. And everyone's like, that's crazy. Because normally, historically, companies like Amazon went public when it had like a$400 million valuation. Often companies went public when they had like a$40 million valuation or even a$4 million valuation. The idea is it was amazing that companies could grow that big to become worth a billion dollars and still be private. And so people started talking about these things called unicorns and the number of unicorns started going up.

3:02And then people started talking about things called decacorns, which were for private companies worth$10 billion. And then in my early years at Axios, I invented these things called minotaurs, which was companies that not only had a billion dollar valuation, but had actually raised more than a billion dollars in equity capital over the course of their various rounds. And there weren't very many minotaurs, there were maybe like a dozen or so but that was just the next step of over the course of many years and many rounds of fundraising you could raise up to a billion or more than a billion dollars and so companies like we work or uber were famous for having raised more than a billion dollars before they went public now we have just obliterated this entire concept because open ai as a private company, in a single round, it has raised$122 billion, which is the largest single equity fundraising round in the history of humanity.

4:01It dwarfs the biggest ever IPO, which I think was Saudi Aramco, where they raised like 39 billion. And that was in the public markets. This is just in the private markets. And so my question to you, Emily, is does this now mean that the private markets are weirdly somehow deeper and more liquid and there's more money there than in the public stock market?

4:28Felix Salmon: No, I don't think that's what it means, actually, because even though OpenAI has raised this insane multi-billion dollar round of funding, and as you pointed out, it's big and astounding and all of this. It's still planning on going public, maybe even as soon as this year. And that's because it needs even more money. And as my colleague Dan is reporting this morning as we're taping, it needs so much money that it's going to run out in the private sector. And it has to go -$122 billion just doesn't last as long as it used to. Yeah. It's going to run out of options in the private market and it has to go public because it needs, it's going to need a lot more money.

5:11Felix Salmon: It's looking at a valuation of trillions of dollars, according to his reporting. And it's not the only private company that needs that much money. There's also Anthropic, which is also planning on going public maybe as soon as this year. And there's also XAI, which is also planning on going public this year, apparently at a $2 trillion valuation. But I just wanted to finish my thought, which is I've been thinking about this a lot. And it seems the previous tech revolution was kind of cheap and could be scaled relatively cheaply. The current tech revolution, the AI one, is really, really expensive.

5:47Felix Salmon: And it has, in fact, made the public markets perhaps relevant again. Now you may speak. So the idea here, and I think you're absolutely right, is if you look at, say, Amazon was the single biggest investor in this round, I think in$50 billion of the$122 billion. And they or 35 billion or some enormous amount of money anyway but they specifically made that money contingent on open ai going public if it doesn't go public then they're not going to get the money a little bit like in that last big round open ai did a lot of the money was contingent on them like losing their non-profit status which they eventually wound up doing so open ai kind of has to go public now because this is kind of explicitly couched as a bridge to an ipo but like most bridge to IPO funding rounds are based on the idea that like it's the last big round of funding and then you'll go public and then you'll have liquidity but i think the difference with this one is that in sam altman's mind that IPO is also going to raise an insane amount of money like the as we were just mentioning the xai IPO which is also the spacex IPO is going to raise at least$75 billion if Elon has his way.

7:03And I wouldn't be surprised if it was closer to$100 billion. So, yeah, it's like you can have all of this money in the private markets, but you can also have this much money in the public markets. And this is a whole new order of magnitude of the amount of funding that the public markets are able to provide. And in a way, I'm like, wow, good for them. Because, you know, most of the time, public markets are just sort of price discovery and capital allocation mechanisms. But they don't provide a huge amount of direct capital to companies in this way, you know, in primary and secondary offerings.

7:40Now, the amount of capital being directed to companies in the public markets this year, I mean, it's going to be hundreds of billions of dollars just for a handful of companies between OpenAI and SpaceX. and anthropic.

7:55Elizabeth Spiers: For OpenAI, most of the spending, too, is just going to physical infrastructure. They're going to spend$1.4 trillion just on that, which is mind-boggling. Another thing about the Amazon contingency, though, it's either they go public or they reach AGI. What does that even mean right now, given that it keeps getting redefined? That's marketing, is what it is.

8:21Felix Salmon: What do you think it means for the stock market? I mean, we know the S &P 500 is weighted according to company size. And so if you move these three multi-trillion dollar companies into the indexes, should we worry about that for some reason, in some way, about stock market concentration and things like that?

8:40Elizabeth Spiers: I think it's already a problem that the indexes are so top-heavy. It basically means that there's a lot of risk concentrated in one sector. In theory, you put money into indexes partly to diversify a portfolio. Right. So the mega caps are a very high percentage of the S &P 500. And if these three companies join the mega caps, then the mega caps collectively will be an even higher percentage of the S &P 500. So the S &P 500 won't look like a diversified set of stocks so much as it'll look like a bunch of tech stocks and a few other things that are tacked on. I do think that in terms of the capital allocation mechanisms, the fact that these companies are going public at such enormous valuations means that huge amounts of index tons of money is going to have to start chasing them now the minute they go public they are not in the index s &p has to add them to the index at some point and historically companies have had to be public for some amount of time before they get added to the index i know that elon is sort of negotiating with s &p right now about can we like get pre-approval for spacex to be part of the index my guess is that open air and anthropic would do the same thing but if that's the case then the book runners the banks who are running the ipo basically don't need to do any work at all they just need to go straight to all of the index funds and say well you need to own this so put in your order right now you don't have any choice and then they just take all of the orders from the index funds and bish bosh they raise all of this money, right?

10:18And so raising this money in the public markets has almost never been easier if you can have this kind of valuation and be straight into the S &P 500.

10:31Felix Salmon: It's interesting what Elizabeth was saying about risk, because the index becomes more top-heavy. There was some research, I think I just read, or someone I talked to, who said the risk isn't as bad as you would think it is because bigger companies are inherently less risky than smaller ones. I wonder what you would think about that.

10:52Elizabeth Spiers: I think that's true over centuries, but I think so much of the top heaviness is really going to be AI-focused, and I feel like that's a different risk profile than the index overall.

11:05Felix Salmon: But I mean, the risk until the AI companies, it was tech companies, and that was fine, and everyone became a tech company anyway because the yeah and so i think this is a big important distinction right which is it's not just mega cap tech companies right now it's highly profitable mega cap tech companies if you look at nvidia's pe ratio it's not particularly out of whack with the pe ratio of the market as a whole right you know some random waste management company could easily be like trading on the same p as nvidia but the reason why nvidia is worth four trillion dollars is because it just has such enormous earnings because everyone is buying its chips right and so like in that sense the stock market is doing what it should do which is it's applying a multiple to earnings and it's trading at normal valuation that i think you are right emily that like it's very rare for a company with hundreds of billions of dollars of earnings to suddenly like see those earnings disappear right elizabeth is also right that if and when these big ai companies join the index they don't have earnings they have losses and so at that point the valuations seem much fluffier and weirder because you're not buying a multiple of earnings you're buying some kind of hopes and dreams that eventually you'll stop losing money and start making money Well, they have revenue, though, right?

12:33Felix Salmon: Like, OpenAI is making... Not particularly enormous revenues. $2 billion in revenue each month from OpenAI, according to the company. So that's$24 billion a year, right? So, like, if you're going to put a trillion-dollar valuation on that, that's a massive multiple of revenues. Okay. That's like 50x revenues with no profits at all. Well, what was Amazon when Amazon went public and everyone was like, doesn't make a profit? Right. And that's the dream. When Amazon went public, it went public at a$0.5 billion valuation, right? There's a big difference. The stock market can cope with a loss-making company worth$0.5 billion because if it goes to zero, no harm, no foul.

13:18If you have a trillion-dollar company going to zero, then that's a lot of money that's lost out of people's S &P 500.

13:24Felix Salmon: Well, then that's a good argument for not fast-tracking these companies into the indexes. Like, why do we think that's okay? Well, the idea is that the indexes are cap-weighted, right? And so if the biggest companies or many of the biggest companies aren't in the index, then you're not really buying the whole market. Why does OpenAI think it's worth trillions of dollars when the math you just did made me think it's not? It's not even what OpenAI thinks. It's what OpenAI's investors are willing to invest at. Right. Right. This is like open AI does not is not in charge of open AI's valuation. So investors think it's worth trillions, even though the revenue suggests that it's not yet there.

14:08Felix Salmon: They just think it has a lot of potential. And it does look empirically that there's huge demand from investors to buy into the sector. Right. So the book runners for the SpaceX IPO have just upped its valuation from 1.75 trillion to 2 trillion and 1.75 trillion seemed you know insanely huge or is it 1.25 yeah it was 1.25 trillion just a few months ago just a couple months ago when they merged xai into spacex now it's 2 trillion all of these numbers are just invented no no one knows where these numbers are coming from but it does look like there is demand out there in the market at that kind of valuation.

14:48Now, it's an interesting question, how much of it is forced demand from index funds that have to buy no matter what? But I do think there's real demand as well.

14:58Felix Salmon: And what about this SpaceX situation? I mean, they're doing this to get more money into XAI, which of all the AI companies seems like the least sort of, I don't know, successful potential.

15:11Elizabeth Spiers: It's a weird company anyway, way, because part of the business that's the most successful right now is really Starlink. And so when you think about it, it's a company that produces AI technology, sat phones, technology, and rockets. How do you value that kind of company? And I think part of the logic behind the XAI acquisition was just to drive the valuations up, because I think the comparables for AI companies are just much higher than they would be for Starlink and SpaceX alone. I think it's also the fact that people are talking a lot about how Google is the natural winner in AI because it has a whole bunch of cash flows that it can use to invest in its AI projects in a way that OpenAI and Anthropic really don't.

15:59The only thing they can do is try and sell access to their chatbots, and that will give them a couple billion dollars a month, but not sort of mega cap kind of cash flows. by merging xai into spacex what elon musk is doing is he's saying well now all of those starlink cash flows are going to be available to xai to help pay for shit and that is going to help xai grow and then he also of course as we have discussed on this show has this whole idea that this is all connected because the future of this company is to put data centers in space

16:33Felix Salmon: right and then i did read also somewhere could have been on x.com so but i did read that maybe at some point musk will merge all his companies into this space up spacex thing like just keep

16:47Elizabeth Spiers: rolling them all together rockets and ai and shit posting well there's one other company that matters right which is tesla and it would be very easy for elon to make that argument because what he's doing at Tesla is he's very much pivoting from cars to robots and his idea again like we can believe it or not I think it's probably true over like a 10-year time horizon is that in 10 years there are going to be a lot of robots doing stuff for us and those robots are going to have a bunch of AI chips in them because you kind of need if you're like a humanoid robot doing things like, you know, doing someone's dishes or folding their clothes or doing healthcare stuff or whatever it is, do you want the robot to do?

17:36Like, there's a bunch of like, kind of artificial intelligency things that you need the robot to be able to understand in order to be able to do that. Folding clothes is a notoriously difficult problem to solve for robots right now. So AI and robots are very closely interlinked. Tesla is basically a robot company at this point rather than an AI company. So it kind of makes sense to fold the robot company into the AI company. I think the reason he hasn't done it is just because on a regulatory basis, it's much harder for Tesla to buy one of Elon's companies because it's public than it is for him to just merge two private companies, which is what he did with SpaceX and XAI.

18:16You'll recall when Tesla bought SolarCity, there were millions of lawsuits saying this was an insider transaction and like he screwed public shareholders and all of this kind of stuff because he does have those public shareholders i think he would like to and i think that now that he's incorporated in texas it's going to be easier for him to do that so i wouldn't rule it out at all i think it's i think everyone kind of expects it to happen at some point but i think he's going to take spacex public first have a share price for spacex which is public and everyone kind of understands is the valuation of SpaceX and then a valuation for Tesla.

18:52And then you can just merge them, whatever the public price is of those two companies. No one can really complain.

18:58Felix Salmon: Well, it all seems very exciting. Exciting moment for the public markets that I haven't I haven't seen in a very long time, like since Meadow and Public or something.

19:08Elizabeth Spiers: Numbers that no one can fathom are so big. They are insanely big. It is really it is. We have actually run up against the point at which $122 billion, say, or$2 trillion. These numbers are so enormous that it is kind of beyond the ken of any normal human being, myself very much included, to understand just how big these numbers are. I cannot get my brain around the size of these numbers.

19:33Felix Salmon: And they don't employ that many people, these companies. No, I mean, quite the opposite, right? They're job destroyers rather than job creators.

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23:30Felix Salmon: We have it delivered. Or pick it up. Mommy, look! I think your kid is walking up the slide. Really? Auto Trader. Buy your car online. Really?

23:40All right, what's next?

23:41Elizabeth Spiers: Spices. Oh! Space and spices. From space to spice. I believe there was a big science fiction novel about spice called Dune. Is that what we're talking about?

23:52Felix Salmon: I saw the Dune 3 preview, and I haven't seen the other Dunes, but it looked so amazing. It has this great soundtrack. I was just, like, captivated. Just as a great visual storyteller. Have you seen the other Dunes? I have. I saw I definitely saw the first one. I think I saw the second one. I might want to watch them all and then go to the IMAX Dune 3. But we should talk about spices, the real spices. Elizabeth, what's happening with real spices?

24:17Elizabeth Spiers: So McCormick is buying Unilever's food business. And McCormick is, of course, the giant spice company that's based in Maryland. They own French's and Stubbs and, most importantly, Old Bay. And they are buying Unilever's business, which includes Helman's and Knorr. They're paying like$45 billion, right? Yeah. And what the McCormick CEO says will be a global flavor powerhouse.

24:43Felix Salmon: Ooh. And what's the combined value of the company? It's like$69 billion?

24:48Elizabeth Spiers: Yes. Yeah. Nice, as they say. But the point here is that the Unilever part of the combined company is much bigger than the McCormick part of the combined company. And in fact, McCormick is paying in equity. It's not paying in cash because it doesn't have$45 billion of cash. And so most of the new company, the new McCormick, is going to be owned by existing Unilever shareholders. it's massively dilutive to existing mccormick shareholders and so i think of this as a take under i think of this as like a winnow eating a whale you know can i just repeat that a minnow eating a whale there we go and we saw this quite recently when discovery which was this tiny little cable company bought warner brothers which was a massive studio which is worth much more than discovery and it's kind of interesting to me that the markets are like well yeah you do this thing right unilever is does a lot of different things most of which aren't food and it makes sense to spin off its food division into a company that does food and not a whole bunch of different things a bit like you know comcast did a whole bunch of different things most of which aren't content creation it's like a cable company basically and so it spun off warner brothers into discovery which does one thing which is streaming and tv and stuff which like just do that one thing even if you're what you wind up selling a big subsidiary to something which is much smaller than that subsidiary so but the markets don't like this at all unilever stock dropped 24 on the news why do they hate it do we understand unilever stock did not drop 24 percent after the announcement.

26:39But it has dropped that much over the past few months.

26:42Felix Salmon: I think there's just worry over Unilever more broadly. And investors are sort of like, well, you're not going to do food anymore. You've done food for like 100 years. What are you doing? Like, I just think maybe there's not a lot of faith in Unilever. It's more to the point that they don't have faith in McCormick, right? Because what they're getting, what that Unilever share price today is pricing in, is a bunch of future McCormick shares that they're going to wind up receiving. And they're saying, we don't really have faith that those future McCormick shares are going to be worth as much as you think they're worth.

27:16Felix Salmon: That's a shame. The piece that we read in the prep did say that spices had been doing well up until recently, and now people are cutting back. You'll be once, man. People are just eating less. If you make less food, you will need less spices to make less food.

27:30Elizabeth Spiers: It's also just food is expensive now. And spices are not cheap. So I think when people cut out things that they don't really consider necessities, spices and condiments go out the door.

27:41Felix Salmon: So a friend of ours, I was told, eliminated winnowed, not minnowed, winnowed his spices down to just 10 spices. And I thought that was sort of interesting because we have a messy spice cabinet. There's like too many spices and then you wind up buying the same spice more than one. I I wonder if this drives McCormick revenues, actually, is people who are making recipes and they're like, I don't know, do we have time at home? I don't know, just buy it again. And then they have like four times. So maybe that's, you know, part of what's going on.

28:14Elizabeth Spiers: I finally alphabetized my spices for that precise reason. I kept buying the same ones over and over again.

28:21Felix Salmon: Do you think you could only live with 10 spices?

28:24Elizabeth Spiers: No, no. Are you sure? I think it is possible to live.

28:29Felix Salmon: with a mere 10 spices i mean metaphorically like i couldn't live happily with 10 spices i feel like i need 400 kinds of chili pepper no are you sure i don't know i'm very inspired by the just have 10 spices i feel like that's a good way to live i do think that a lot of the reason why people have so many spices is cookbooks and the recipe will be like and then add these four different spices and you're like well i guess i need those four different spices and so you go out and buy them because it's in the recipe. Even, you know, if you maybe don't and you can use one of the other ten instead. Yes, exactly.

29:03Felix Salmon: You don't need to go buy whatever they tell you to get the cumin. I think I have like five cumins. You know who I blame for the explosion of spice cabinets? Is Yotam Ottolenghi. Like the number of fucking spices that he puts in all of his recipes. Do you really need all of those different spices? Maybe you don't. Maybe you can just make do with ten.

29:23Elizabeth Spiers: Just put salt. He's a recipe maximalist in every sense. Every single recipe that he has is delicious, but it's like, this will take you 10 hours and you need to go get three obscure ingredients and caramelize some onions for 58 minutes.

29:39Felix Salmon: Just to talk more a little bit about McCormick and with my random musings on this story, it's nice that it's a local Maryland company. Producer Jessamine was talking about how excited they get in maryland about old bay and it's nice in these times that it's not some like multinational you know giant or something it's like a very local firm i don't know so do we i think maybe that's what the unilever shareholders are worried about right because unilever is headquartered in it used to have dual headquarters in amsterdam and london and then they've got rid of one and i can't remember which one they got rid of it's a very european company yes and so most of its shareholders or a huge chunk of its shareholders are europeans right and they're and they're a big part of the uk stock exchange and you big part of the amsterdam stock exchange and now they're like oh we're gonna wind up owning a bunch of shares in this random spice company in maryland america who or what is that that's not what we do like we are european shareholders we're not us shareholders and maybe elizabeth that's the answer to your question is that all of those European index funds who own a bunch of Unilever shares are going to have to sell because Unilever is going to be much smaller and they don't really have a mandate to own shares in a Maryland spice company.

31:00Felix Salmon: Well, that's too bad because it seems lovely. And remember also that just in general, the US stock market trades at much higher valuations than the European stock market. So if you start applying those European PE ratios to McCormick and all of that, then maybe it looks less attractive. Does that mean that Unilever shouldn't have done this deal? Or is it just like, fine, because the stock price went down like that? Does that mean like they made a bad choice? First of all, it's Lever, named after Lord Lever. Thank you so much. The guy who invented soap. And do we believe in efficient markets and that any deal which makes your stock price go up is automatically good and any deal that makes your stock price go down is automatically bad?

31:44Felix Salmon: No, I don't think so. Because it's short term, you got to look over the long term to really understand. I do think that the whole Unilever moving into food thing, you know, I can see the argument that maybe it wasn't such a good idea after all, and they should stick to their knitting and, you know, be good at soap. Didn't the story say they're in food for like a hundred years or something? Yeah. I mean, it's just like a century long detour. Food is kind of out, I think. Processed food, people aren't into it anymore. So all the processed food companies are kind of like flailing about trying to figure out this new world.

32:17Felix Salmon: We've talked about Kraft macaroni and cheese before, right? I will say that GLP-1s pose very little threat to soap. Also, we should mention that Slate's Dan Kois has some 8 ,000-word story on soap that I keep meaning to read, but I probably won't read, but I want to, about why bar soap is amazing, but no one's using it anymore. Bar soap is amazing. Hard agree. Yes, but no one uses it anymore, just like olds. I use it. Well, you heard what I said. Only the olds are using bar soap. Okay, you've outed me as an old. But bar soap is apparently much better. It's self-cleaning and there's no waste. It just goes away.

32:53Yeah, we should also just mention, since we're not going to have the opportunity to talk about this again, that there are certain things that are just where the biggest and most mass market thing is also the defining and like the best version of the thing. And I feel like Heinz ketchup is one of those things. And, you know, Gillette razors is one of those things. and Hellman's mayonnaise is one of those things. Hellman's mayonnaise is part of you in the liver. And it's just like every time you buy a store-bought mayonnaise that isn't Hellman's, you regret it. You're like, why didn't I just buy the Hellman's?

33:27Felix Salmon: I agree. I think Hellman's is the best mayonnaise. Although you can get store brand, I think is the same as Hellman's. I get the Wegman store brand and tastes exactly like Hellman's.

33:36Elizabeth Spiers: I hate mayonnaise, so I have no opinion on this.

33:39Felix Salmon: People have strong opinions. I am a big fan of just making your own mayonnaise at home, but that's just a whole other. That seems really hard because don't you have to use eggs and the eggs break? And like it always seems sort of intimidating to me. But do you need any spices? Because I don't want to buy any spices to make it. No, if it's an aioli, then you need spices. Then you need garlic. Is garlic a spice? I consider it one of the core 10 spices powder. It's very important. Oh, garlic powder. Yeah. Do you not use it? I never use garlic powder. What? I even use it when I use fresh garlic. I use a little extra.

34:13Felix Salmon: gives it a little more oomph. I'll look into this.

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36:22This episode of Slate Money is sponsored by Drive with Jim Farley, which is a podcast with the CEO of Ford. It has a brand new season, season four, which is coming out later this month. And for anyone who'd like to get behind the scenes with the CEO of Ford, Jim Farley, this is the best possible podcast for you. Every season, he talks to some of his favorite people about what they drive and what drives them. Like Sir Chris Hoy, who's not only a British racing driver, but he's also one of the most successful Olympic cyclists of all time. He talked to Jim about his career as an athlete, being knighted, and his cancer diagnosis.

37:07I checked out a couple of episodes of Drive with Jim Farley, including a very fun one with Matthew McConaughey from a couple of seasons ago. Holds up incredibly well. He's one of life's great raconteurs you'll almost certainly find something you love across the seasons he has a very broad range of guests and you'll find a few that you recognize and probably some that you don't and you would want to hear from anyway so to listen to drive with jim farley just search for drive with jim farley in your podcast app that's drive with jim farley

37:46what's next guys wnba oh yeah the women have got a 400 pay hike thanks to claudia golden this is awesome emily this is your wheelhouse talk to me claudia golden the nobel prize winning

38:00Felix Salmon: economist she has helped the women's basketball players negotiate a 400 raise in their latest contract and it's awesome and she's amazing. And I found out about this like everyone else by reading the Wall Street Journal. And apparently she, everyone was very stressed out about this, but Golden was like, just focus on one number. Don't get all bogged down. This is just math. And in the end, she basically negotiated a higher percentage of league revenue that would go to the players. They're all getting a lot more money. Yeah. The idea being that the men NBA, mnba which we have to start calling it i want to call them the mnba from now on they have their players get a much higher percentage of revenues than wnba does and the reason given by the wnba team owners why this was the case was basically well that's because the mnba teams make money and the wnba teams don't right and so they're like we can share profits more easily than we can share revenues because if we share revenues while we're losing money we just have no more money to lose but this argument evidently didn't work very well and so now the players are getting more money and somehow i don't think that this is going to cause some sort of plunge in investment in wnba and all of the capitalists retreating and the sport disappearing i feel like the sport is really here now.

39:30Elizabeth Spiers: Yeah, the sport is also just growing really fast. You know, TV viewership is up 23 % year over year and merch is up 40%. I mean, so they're building those things into the negotiation. But, you know, it's interesting to me to look at what that means for salaries, because the average salary before the negotiations was around 118K and now it's 580K. But still, compared to the NBA, where the average player makes 12 million, it's, you know, still, there's still a giant disparity.

39:58Felix Salmon: What I learned in reading the prep was that, what are we calling it? The NBA? The men's basketball association didn't become profitable until the 1980s. So 40 years into its existence. Yeah, it took them a really long time. And I'm sure they were paying players pretty well in the 80s. I don't think they were. I think back then, players were making relatively little precisely because they weren't the profits, but we would need to look at them. I want to know. But fine. But still, because everyone's saying, oh, they're not profitable yet. And it's like, well, neither was the NBA, you know, the Men's Basketball Association.

40:33So just chill.

40:35Elizabeth Spiers: One of the best things that I caught on to is that when Claudia Golden won the Nobel, she only said yes to three requests. One was that she would negotiate this deal for the WNBA. The other two were that she would go and wait, wait, don't tell me. And that she would throw a baseball out for the opening pitch for a Red Sox game.

40:53Felix Salmon: I mean, no lies. I mean, that's a legend. And she threw a strike. If Wait Wait Don't Tell Me ever calls, I am there. Like, I will drop it all for that. What a great show. Don't you think? I love a quiz show. I do think that this all feeds on some level into the question of why do people own sports teams? Because obviously now, if you buy a WNBA team, then you're going to have to lose more money because you're going to be paying the players more, at least in the short term. And yeah, the idea is that the valuation will go up and so you'll make money on higher valuations and eventually there'll be growth and maybe eventually there will even be profits.

41:34But I do think that a huge amount of sports team buying over the past 30 or 40 years has been people buying sports teams that lose money and they're okay with that because they are already rich and they don't mind losing money and they are ultimately making money over the long term because the value of the team goes up. I feel like that's the big dynamic that everyone is kind of looking for in the WNBA as well. It's like we need a bunch of investors to come in and start buying these WNBA teams at ever spiraling valuations. And if that happens, no one cares if there are annual losses.

42:10Elizabeth Spiers: I feel like buying a sports team is a sort of luxury vanity investment, like buying a small, unprofitable prestige magazine or a giant yacht? So I think it used to be, right? And then more recently, especially in football, American football and the big profitable sports, we've seen private equity come in and institutional investors. And once these things actually become profitable, then you can start valuing them on PE ratios and all of that kind of stuff. And it becomes less of a vanity play. But yeah, that was historically what it always was. It was always just, hey, you own a Picasso, So I own the WNBA team.

42:49Felix Salmon: Also, I just wanted to say that this negotiation for the WNBA was sort of the groundwork was laid like 10 years ago when the U.S. women's soccer team filed a lawsuit for equal pay. And I think that sort of changed the conversation around women's sports. And over the past decade, we've really seen more, a bigger push for getting women higher pay in sports to the point where people are showing up to WNBA games with like enchanting like pay them and stuff like that. there's like big support for this that is important to mention. Yeah, no one feels sympathy for the owners. Yeah. I do think the more interesting question for me is the relative pay of the soccer players rather than the basketball players.

43:30Because in basketball, you can say, well, the revenues are so much higher in the men's game that there's just so much more money to slosh around. It kind of stands to reason that more of it will go to, even with a lower percentage of revenues, the men would still wind up with much higher pay. In soccer, like men's soccer in the United States, I don't think has a lot more in the way of revenues than women's soccer. And so like it's a much cleaner place where you can see pay disparities.

43:59Felix Salmon: And you could also see the women were doing so much better, like on the world stage, winning the World Cup and all of this. And like the men's team wasn't. So it was even more like on its face, unequal. I like the way that the men's team qualified for the World Cup this year, which is just by hosting it. The host country always qualifies. Meanwhile, Italy, like for three World Cups running, has failed to qualify. No one believes that the U.S. team is better than the Italian team. I don't believe it, and I don't even know anything about it.

44:42We should have a numbers round. Emily, what's your number?

44:45Felix Salmon: My number is 90,$90. That is how much you would have to pay if you want to buy a knitting kit in order to make the sweater that Ryan Gosling's character wore in Project Hail Mary. It's this like cardigan with these wolves on it, but the wolves look kind of like nice. And apparently it was hand knit for Gosling. He saw it on set and he was like, I love this sweater. and they were like, well, those wolves look too mean. Let's get this knitted. And then there was like a race to knit the sweater. They only had like two to three days to knit at least four sweaters because you need one plus backups.

45:19Felix Salmon: And then the movie has been a huge hit. Everyone should go see it. It's so good. I really enjoyed it. Ryan Gosling looks great. He's got the sweater. He's got these t-shirts with these funny science puns on them that I'm sure will also sell out. But the Wall Street Journal focused on the sweater, which you cannot buy. You have to buy the knitting kit to make the sweater and it's produced by some company called Mary Maxim, a family-owned knitting and crochet supply company. And they are scrambling to fulfill the orders for the knitting kit. That is my number. And it's only 90 bucks? It's only$90.

45:52Felix Salmon: And, you know, they had a picture in the journal of the sweater on someone that wasn't playing like a middle school teacher sent to space to save the universe or whatever. And, you know, it looked okay. It's a sweater. It's just a sweater, guys. Elizabeth, what's your number?

46:08Elizabeth Spiers: My number is 750 and that's Icelandic krona. That is how much a hot dog costs. About$6 in American money. And this is a big deal because hot dogs are 5.2 % more expensive than they were last year. And apparently for Icelandic people, hot dogs are the equivalent of the New York pizza slice. They're the sort of baseline indicator. It's like the affordable food that everybody eats. So the Icelandic people are upset because their hot dogs are more expensive. But there was somebody quoted in this Times story that said, well, it's very classic to get a hot dog and then complain about the price. So complaining about the price of hot dogs is also apparently built into the culture.

46:49Felix Salmon: So$6 is the average hot dog price in Iceland?

46:52Elizabeth Spiers: Yep.

46:53Felix Salmon: Food is expensive there, right? Because it's hard to...

46:55Elizabeth Spiers: It is. They have to import a lot of it. Bill Clinton went to the most famous hot dog stand in Iceland a few years ago. And normally, whenever you go to this specific hot dog stand, you ask for the everything, which is like fried onions and a bunch of other stuff. And Clinton asked for his with just mustard. And all of Iceland was horrified. But now the hot dog stand sells a hot dog called the Clinton. And it's just a hot dog with mustard. I mean, I approve.

47:23Felix Salmon: That's like when politicians eat pizza in New York City and everyone gets upset about it. They're like, you ate it with a fork and knife. And it's like, what do you expect these men to do? Arzio had no idea how to eat pizza. Do you remember that? But what do you expect? You're being filmed eating pizza. Like, it's just not going to work out any way you do it. Like, just take it easy. Hasn't Bill Clinton been vegan for decades? Yes. I guess it was a long time ago he went to Iceland. Yeah. All right, guys. I have a by the numbers section in my newsletter, and it has four numbers this week. So you get to choose.

47:55Do you want the sports number? Do you want the cooking number? Do you want the travel number or do you want the wine number?

48:03Felix Salmon: I want the cooking number. I feel like we've done a lot with food this episode. Let's keep going. Okay. So the cooking number is 600, which is the number of dollars that the new KitchenAid stand mixer costs. The one with the light? It has a light. Emily knows about this because this is the biggest advance in KitchenAid stand mixes for 75 years. Yes. They have put a light in it.

48:30Elizabeth Spiers: You can bake in the dark. There were two big changes to this. Number one is it has a light, a little LED light so you can see what's in the bowl, which I think this is a great idea. And number two, it has on the speed settings, it doesn't just go one, two, three, four, five. It goes one, two, three, four, five. And it also has a half if you want it to be. Okay.

48:49Felix Salmon: But the light thing seems bad because it's like if it burns out or something then you have to replace it i don't like that that's the whole point leds don't burn out they never burn out right i knew that are you sure it's not gonna have any problems also i think they should put a camera in there so you could do like cool viral videos of making cookies and stuff the influencer edition yeah after i got married we did that thing that married couples do which is get a kitchenaid stand mixer wedding present and we managed to break our KitchenAid stand mixer within a few months. What? Who does that?

49:22I know, they're meant to last forever. And we used the sausage making attachment and tried to make sausages and we just totally blew out the engine. Okay, I think that's it for us this week. Thanks so much for listening. Thanks so much for emailing us on slatemoneyatslate.com. Thanks to Jessamyn Molly for producing. and we'll be back next week with more Slate Money.

50:14Felix Salmon: We'll be right back. Mommy's buying a car. Mommy, look! Uh, I think your kid is walking up the slide. Kyle, again? Really? AutoTrader, buy your car online. Really? Parles-tu français? Hablas espanol? Parli italiano? If you've used Babbel, you would. Babbel's conversation-based technique teaches you useful words and phrases to get you speaking quickly about the things you actually talk about in the real world. With lessons handcrafted by over 200 language experts and voiced by real native speakers, Babbel is like having a private tutor in your pocket. Start speaking with Babbel today. Get up to 55 % off your Babbel subscription right now at babbel.com slash acast.

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51:14Thank you.