Topics Covered: Pupu Platter, Comic Crisp Apples, Baseball Mud, Starbuck’s Payment Processing, Youth Sports Paradox

The Friday Five is a monthly email newsletter curating and discussing five of the most interesting topics, stories and general musings found in my Encyclopedia Britannica collection and other sources.

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1. Pupu Platter:

A) High heels, originally designed for soldiers to help keep their feet in the stirrups, make up 14% of the $250 billion global shoe market (and roughly 90% of the complaints). Madrid plays host to the annual High Heel race, where contestants race through cobbled streets in a pair of high heels. The race is run as part of Spain’s LGBT festival and was created to promote and support equal rights. To run in the race, the runner’s heels must be at least 4 inches high. The winner of the race gets €350 or 1/3 of a Jimmy Choo.

B) A baby girl was recently born on July 11th at 7:11 PM, weighing 7 pounds and 11 ounces — the 7-Eleven baby. When officials at the stale hotdog and Slurpee chain caught wind of the story, they donated $7,111 to a college fund to honor her entry into the world. In case that wasn’t enough, the store also sent the parents diapers and 7-Eleven onesies.

C) Epic Games, the maker of Fortnite, recently hosted the first Fortnite World Cup and handed out over $30 million in prizes for various competitions. The winner of the singles event, Kyle Giersdorf, won $3 million. He is 16. The event was held in Arthur Ashe stadium, where the U.S. Open Tennis Championship will be held in a couple weeks. The winner of that tournament will receive $3.85 million. The winners of this year’s Kentucky Derby, Indy 500, and Tour de France will all win less money than Kyle.

D) More than 1,700 children’s stores have closed in the past year, but Carter’s (I had never heard of them either) is thriving amidst the retail apocalypse. Carter’s is responsible for a quarter of the infant to two-year-old clothing market. While their clothes may be small, Carter’s is not. They have over 1,000 stores, plus exclusive lines at Walmart, Target, and Amazon. Ninety percent of millennial parents and 80% of baby boomer grandparents have shopped at Carter’s within the last year. The company recorded $3.5 billion in sales last year.

E) Having lived in the south, I learned there are a few truths that southerners hold to be self-evident — it is appropriate to dip any meal in ranch, a fried vegetable is still healthy, and a burger should be meat from a dead cow. The recent surge in popularity of plant-based meat substitutes has caused southern legislators to codify this last point. A new law in Arkansas, one of seven states to enact a burger law, prevents companies from using qualifying words such as “veggie” or “plant-based” before the word burger. Soy milk is also on the naughty list. The logic, according to the lawmakers, is to protect agricultural producers (animal-based meat sales haven’t fallen at all) and to protect consumers from getting confused.

2. The Comic Crisp Apple

A new apple variety, the WA 38, or as it will be commercially known, the Comic Crisp, will be launching this year. This will be the biggest launch of a new apple variety ever. Based on the number of trees planted, the number of Comic Crisp apples on the market will surpass popular Pink Lady and Honeycrisp varieties within five years. The gamble on the Comic Crisp is unprecedented in the apple industry.

It takes about 22 years for an apple tree to grow and bear fruit, which means that Comic Crisps were first planted back in 1997. The Comic Crisp is the offspring of an Enterprise apple and a Honeycrisp.

There are a few apple orchards that are responsible for crossbreeding and creating new types of apples. Each year, these orchards will plant roughly 10,000 crossbreeds, each genetically unique. After testing the apples for appearance, taste, durability and a myriad of other factors, the orchard’s resident Johnny Appleseed will pick one or two “winners” to plant in a small batch in order to test its commercial viability. Then, if there is consumer demand, the apple will be grown in larger volumes and mass marketed. As such, it takes over 40 years to truly launch a new apple variety.

It is possible to patent the unique formula for an apple. The problem is that patents only last for 20 years, less than the gestation period of an apple. So, by the time a farmer determines that a new apple variety is commercially viable, the patent will have expired and so too will have their profit margins. Instead, farmers file trademarks and work to build a brand for their apple. While anyone can grow that same apple, if launched correctly, consumers will almost always prefer the name brand to the generic brand. The Comic Crisp launch has a $10.5 million marketing budget.

The Comic Crisp launch is unique for two reasons. First, the variety was developed by Washington State University, one of three public apple breeding programs in the US. As a public program, the university readily licensed its patent to other Washington State growers. Second, the Comic Crisp tested so well at Washington State that farmers decided to go all-in and skip the consumer demand test phase of the process. With proven market tests, Washington farmers have invested half a billion dollars planting 13 million Cosmic Crisp trees. Very soon, in a grocery store near you, you will be able to judge for yourself if the Cosmic Crisp is worth the hype.

3. Baseball Mud

The balls used in professional sports are held to rigorous standards. We all remember Deflategate. Footballs must be inflated between 12.5 and 13.5 PSI. In the AFC championship, the balls the Patriots were using were measured slightly below that threshold due to cold weather or tampering, depending on where in the country you are from. The scandal resulted in a 243-page investigative report, loss of first round draft picks and the suspension of Ugg boot model Tom Brady.

In 2006, in response to activists from PETA, the NBA switched the material of its basketballs from real leather to a composite letter. On the night the new ball was launched, Charles Barkley sat on the set of Inside the NBA eating a hamburger in protest. The players hated the new ball and the NBA switched back to real leather after a couple months.

In baseball, everyone of the 240,000 balls used in a season is treated with a dollop of mud collected from the banks of the Delaware river. The section of river produces mud that has unique geological properties coveted by the MLB. The exact location of the mud, however, is kept secret from everyone, including the MLB. Treating baseballs with mud is in the official MLB rule book and the Delaware river mud is the only mud allowed.

The special mud is collected by one man, Jim Bantliff, whose family has been collecting MLB mud for three generations. Bantliff walks down to the river, shovels some mud into a bucket, walks home, runs the mud through a secret treatment process in his garage, and then mails the mud to the various MLB teams. His wife sends invoices to the teams. That is the whole operation. In some backward form of monopolistic pricing, Bantliff only makes $12,000 per year from MLB, despite being the mud supplier allowed.

The MLB has been rubbing mud on its balls since the 1930s. A factory baseball has a shine on it that makes it slick, which can cause errant pitches. Any treatment to the balls to remove this shine must not affect the seams of the balls so the pitchers can still throw it correctly and must not affect the color of the ball so the batters can still see it correctly. The mud found on this tiny, unspecified stretch of the Delaware river has been the only viable solution to date. Rawlings, who makes all of the MLB’s baseballs, and the MLB have tried (and failed) for years, with teams of chemists studying Bantliff’s mud, to come up with an alternative formula so as not to be reliant on one 62-year-old man and his secret mud for something so integral to the game. But, for now, Bantliff’s mud is still the best solution, like it has been for the past nine decades.

4. Starbucks’ Payment Processing

Starbucks is a massive coffee empire. They have over 30,000 stores in 76 countries, employ more than 300,000 people, and make $25 billion in revenue annually. There are 161 locations in Manhattan alone (and all but three double as an excellent public restroom). Starbuck’s loyalty rewards program has 16.8 million active members, which is more members than the populations of all but four states. The Starbucks app is the most popular mobile payment system in the US, doing more transactions than both Google and Apple pay (and Samsung pay, but that goes without saying). Three in ten Starbucks transactions are made through mobile pay.

On its balance sheet, Starbucks has $1.6 billion of “stored value card liabilities,” which include gift cards and money customers pre-load onto its app. This is essentially money customers have lent to the company at a negative interest rate (Starbucks makes money on the money its customer loan it). On top of the interest, Starbucks makes $155 million every year on unredeemed gift cards. In total, Starbucks makes north of negative 10% interest from its customers.

Starbucks isn’t the only company to receive free loans from its customers, but few do it as well as the coffee powerhouse. For example, PayPal, who owns Venmo, receives about $20 billion in loans from its customers, but due to government regulations, they must store that money in a separate bank account and can only invest in government bonds, significantly curtailing the interest they can earn on that money. On the other hand, Walmart, which makes 20 times more revenue than Starbucks, yields roughly the same amount in gift card loans ($1.9 billion compared to Starbuck’s $1.6 billion).

5. The Youth Sports Paradox

The youth sports market in the US has doubled in value over the past decade. It is now a $17 billion industry. Yet, during that same time frame, the number of kids playing youth sports has significantly decreased. Over the past ten years, the number of six to twelve-year-olds playing team sports fell from 45% to 38%. Little league participation is down 20% from its peak in 2000. Similarly, this year saw a drop in high school sports participation for the first time in 30 years.

The reason for the decline in youth sports is due to its rising expenses. A study conducted by the Aspen Institute found that children from low income families are half as likely as children from high income families to play organized sports (19% vs 41%). The average cost to participate in youth sports is $692 per child per year. The biggest component of that cost is travel, which accounts for about 25% of the overall annual expense. Per sport average costs range from $191 (track and field) to $2,582 (ice hockey, which is more expensive than both golf and skiing).

Most of the local, public leagues have been replaced by private club teams with elite coaches, facilities, and travel schedules. In wealthy areas, it is common for families to spend north of $20,000 per year on a single club team. Add that to the Church’s 10% tithe and there is barely money left for rent and groceries. Unless you’re Katniss Everdeen, the odds of a youth sports investment paying off are likely not in your favor. The NCAA hands out $3 billion in scholarships per year, but only about 2% of high school athletes go on to play Division I sports, so a 529 fund may be a more valuable investment.

A Utah State study found an inverse relationship between money spent and sports enjoyment. More money spent by parents makes kids feel more pressure and the enjoy playing the sport less. Plus, the high cost often means children must choose one sport to specialize in; the average number of sports played by six to 17-year-olds has deceased for three straight years. This runs counter to a catalogue of research that shows delaying specialization increases the likelihood of athletic success.

Unfortunately, youth sports are big business — investors invested $1 billion into the youth sports market last year — so the schism in sport opportunity and participation between the haves and have nots is likely to only increase.