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Good Thursday Morning. We’re doing something a bit different this week. Through a partnership with the MBA Sports Business Alliance, an organization near and dear to my heart, we have a guest author this week.

The ultra-talented Olivia Harris, a former product manager and current MBA at the University of Michigan Ross School of Business (obligatory “Go Blue!”), is taking the helm for this week’s newsletter. Here’s the rundown of her Sports Business Playbook:

• 📰 This Week’s Topic: AI is everywhere these days. How can the game changing technology impact the sports fan experience?

• 🍸️ Impress Your Friends at Cocktail Party: Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? Hit the “Impress Your Friends at Cocktail Party” section at the bottom for a CliffsNotes of this week’s topic

• 🤯 “Whoa of the Week”: The NBA made its decision on TV partners, and it likely means we’re heading to court.

• 💪 Weekly Reminders that Sports are Awesome: A new NBA arena, a school’s hello at its new conference’s media days, and a bat dog’s goodbye.

Hey team,

In recent years, technologies like generative AI have rapidly infiltrated various aspects of our daily lives.

Since the launch of ChatGPT in 2022, AI has dominated discussions, particularly for those lucky enough to work in product management. In my three years in product in healthcare and retail, I’ve had the privilege to witness firsthand how data can empower people to be happier, healthier, and more efficient. There is also a lot of noise and conjecture around new technologies, and our job is to find the signals in the noise.

So, as both a product person and sports lover, the question I want to explore is: how can AI actually impact the experience of a sport fan?

Let's explore how AI is (and is not) revolutionizing three critical aspects of the fan experience: Betting, Retail, and Viewing.

AI in Sports Betting

Since the Supreme Court granted states the option to legalize sports betting in 2018, nearly 20% of Americans bet on sports annually.

As USA Today notes, “a Harris Poll from November 2022 revealed that 71% of sports gamblers bet on sports at least once a week, with 20% of people betting on sports at least once a day.”

And sports betting is no longer limited to in-person casinos or casual wagers with friends and family, as online sports betting, in a single month, surpassed a billion-dollar spend in 2023 and achieved legalization in 30 states thus far.

What AI will NOT do: Win every bet for you and make you the wealthiest person in the world (sorry, friends).

What AI can do: Enable operators to offer more strategic bets customized to consumers’ habits and preferences in reaction to real-time game developments, and it can give consumers a potential advantage in cutting edge historical research and predictions.

Live, Reactive Micro-betting

Artificial intelligence has already made significant strides in the scope of leveraging AI to determine probabilities by “analyzing historical data, player statistics, and even weather conditions to predict game outcomes with astonishing accuracy.”

The future of sports betting from the operator side focuses on leveraging AI to offer real-time betting options as the game progresses and to help consumers create or find sports betting strategies before placing bets. In essence, consumers can expect increased personalization and socialization, AI-driven strategy support, and more opportunities to place bets during sporting events.

According to a Deloitte report, 82% of attendees use their mobile devices while at a live sporting event. Such statistics are driving the thesis of a growing number of sports betting startups relying on artificial intelligence and machine learning to enhance bets' speed, number, and probability accuracy as games unfold in real-time.

For example, Kero Sports, founded in 2019, aims to embody the same reactiveness and personalized algorithmic nature of social media to the sports betting experience. Instead of waiting for the end result of a game, startups are increasingly aspiring to replicate the stickiness and instant gratification of social media by letting consumers place micro-bets as frequently as every 30 seconds and displaying bets tailored to an individual consumer’s preferences and betting habits.

Accessible, Customizable Betting Strategies

On the betting research/strategy side for consumers, Rithm, a sports betting startup founded in 2022, enables consumers to build their own machine-learning models to help them strategize before placing an actual bet.

The platform has two subscription options, core ($29.99 per month) and premium ($99.99 per month), that will let consumers select and rank game-specific factors they want to be considered in the final output of recommended bets generated by the application. For example, ESPN bets may present an AI-supported probability that the Celtics have a 77% chance of winning the NBA finals in Game 5. Rithm allows users to have visibility and control over the weight of each factor determining that probability, such as historical three-point field goal percentage and defensive performance.

Given the broad reach of sports betting across various sports and leagues, combined with the increasing number of opportunities to place bets, applications like Rithm display the potential of democratizing AI to let consumers “tailor betting strategies to each user based on their preferences and betting behavior.”

These two startups only represent a small segment of the industry, as many legacy players, such as FanDuel and DraftKings, have implemented micro-betting and AI-driven chatbots for strategy support. However, smaller organizations' increasing personalization and agility cannot be ignored and often signal what incumbents will either mimic, acquire, or partner with to scale and succeed.

On the consumer side, while AI advancements do not guarantee perfect predictions, they help consumers become more thoughtful and engaged gamblers and tailor experiences based on their personal approaches to betting and risk tolerance. While bets are final once placed, AI continues to make sports betting more personalized, interactive, and strategic.

AI in Sports Retail

A more legacy facet of fan identity lies within retail, as sports fans commonly buy team apparel, athletic shoes, and other memorabilia to represent and connect to their favorite teams or sports.

Grand View Research suggests the global licensed sports merchandise market size was valued at USD 33.48 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 4.9% from 2023 to 2030. The United States accounted for a bit over 50% of the market, but Asia Pacific is projected to grow the fastest at 5.3% CAGR from 2023 to 2030. The increasing number of international sports leagues, growing cross-cultural fashion trends, and the shift towards online shopping fuel the growth of the market on an international scale.

The most common retailers for footwear include Nike, Adidas, Dick’s Sporting Goods, Footlocker, and Finish Line, and the most Licensed Sports Merchandise Retailers include Fanatics, NFL Shop, NBA store, MLB shop, and some footwear retailers as well.

Although sports retail offers specific categories, the world of retailers is often fighting for the same share of consumers’ disposable income. As Forbes notes, a Statista analysis found that retailers using AI and machine learning outperform ones that don’t. Artificial intelligence has always supported some level of personalization, wherein retailers display suggested items and promotions on the landing page of their websites or via email based on a consumer’s prior purchases. The next generation of AI-powered retail experiences will include but are not limited to, personalized, concierge-like chatbots, expanded search capabilities, and hyper-personalized shopping experiences.

What AI will NOT do: Ensure you get a Patrick Mahomes jersey immediately after his next Super Bowl win, which, unfortunately for all of us Bills fans, feels inevitable.

What AI can do: Personalize and expedite your shopping experience based on your historical habits and preferences and current needs.

Personalized, Concierge-Like Chatbots

Many of us have likely used a chatbot to inquire about an order’s status or receive some level of customer support about an order already purchased.

However, retailers, such as Walmart, are now looking to provide “AI-powered shopping assistants.” Although Walmart and other retailers have spent years building data models and machine learning algorithms in-house, GenAI enables chatbots to be smarter and more reactive in real-time to a customer’s specific needs.

Today’s chatbots are typically designed to answer specific, canned questions, but the next generation will be reactive to a broader range of consumer inputs and optimize for a more efficient, personalized shopping experience. Instead of consumers being limited to a certain set of prompts and later directed to a support agent, retailers can now combine large language models, internal knowledge bases, and inventory information, as well as consumer-specific data, to present products that best align with a shopper’s needs and preferences.

Multimodal, More Knowledgeable Search

A recent IBM report suggests that “Generative AI excels at handling diverse data sources such as emails, images, videos, audio files, and social media content.”

Imagine instead of consumers taking a screenshot of a fitness influencer’s Instagram post, uploading the screenshot into Google’s image search, and scrolling through tons of links, retailers could potentially leverage GenAI to support various inputs and outputs besides text. Instead of retail organizations spending the time and money required to collect, annotate, and train models that support these various data types and sources, Generative AI significantly speeds up the time it takes to support and scale such capabilities.

The report concludes with a bold prediction: “generative AI will have a total financial impact of $9.2 trillion USD on retail businesses through 2029.” The advancements provided by GenAI listed above focus on the consumer experience, but the use cases for GenAI across internal operations, marketing, product development, and supply chain are robust and just as impactful, if not more, to the long-term growth and success of retail organizations.

Sports fans can look forward to an exciting future, following their favorite teams and athletes in their favorite attire and with all the necessary resources to maximize their experience.

AI in Sports Viewership

Approximately 43% of U.S. adults watch live sports at least once a week.

With the growing intersection of tech and sports, several streaming platforms are leveraging cloud technology and AI to provide the most engaging, personalized experience over their competitors in an increasingly crowded market. In addition, sports viewers 40 and younger tend to be more digitally engaged than older viewers, simultaneously watching live sports and following player statistics, game updates, and social media trends on a different mobile application, according to Sportico.

Both trends have resulted in two exciting advancements to the sports fan experience:

1. Real-time graphics and data

2. Personalized multi-viewing

What AI will NOT do: Automatically turn on your smart TV when a good game is about to start (or a good game is in progress!)

What AI can do: Create more engaging and expansive viewing experiences that cater to both naive and dedicated sports fans

Real-Time Graphics and Data

Amazon Prime Vision with Next Gen Stats is probably the most popular example of AI-enabled sports viewing.

Two additional features were added atop of the NFL games streamed on Prime Video in 2023, including “Prime Targets” which shows viewers which receivers are open for the quarterback to pass to with a green circle under the relevant player, and “Defensive Alerts” which highlights players before the snap with a high likelihood of blitzing the passer with a red circle.

The X-Ray feature also allows viewers to open a more detailed panel of player and game statistics alongside the game itself. All are made possible by machine learning and AI capabilities.

Sports fans can expect a growing adoption of real-time analytics that make viewers more educated and engaged in the sport.

Personalized Multi-viewing

Imagine instead of watching a static race or game, one can now ensure their view focuses on their favorite driver (or player), or it knows you are a new fan and would see the most value in different vantage points to maximize understanding.

The good news: it’s already happening.

In a write-up by the 451 Alliance, the group highlights how “​​Formula 1 partnered with Salesforce to process its data using artificial intelligence through Customer 360 to personalize the viewing experience at the individual level in real-time.”

Some sports leagues, such as the NBA, require additional payments or subscriptions to have access to similar experiences, but the increasingly digitally engaged audience will likely expect similar features as a part of the standard service to even watch a game in the first place.

Parting Thoughts

Overall, the rapid integration of generative AI into the sports industry is transforming how fans engage with their favorite players, teams, and leagues.

AI's influence on sports betting has made the process more strategic, personalized, and interactive, enhancing the overall experience for consumers. In sports retail, AI has streamlined and personalized the retail experience, ensuring fans spend less time searching for merchandise and more time enjoying their purchases. Additionally, AI-powered advancements in sports viewing are creating more immersive and customized experiences, catering to individual preferences and enhancing the overall enjoyment of live sports.

As AI continues to evolve, sports fans can look forward to even more innovative and engaging ways to connect with the sports they love.

Disclaimer: The views and opinions expressed in this content are those of the author and do not reflect the official policy or position of any organization.

🍸️ Impress Your Friends at a Cocktail Party

Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? This section is the CliffsNotes of this week’s topic

• Opener: We have a guest author today! Olivia Harris, a former product manager and current MBA at University of Michigan Ross School of Business, is taking the helm to talk about what AI can and cannot do for three critical areas of the fan experience: betting, retail, and viewership

• Shot: In sports betting, AI will unfortunately not win every bet for you and make you the wealthiest person in the world. It can, however, be used by operators to offer more strategic bets customized to consumers’ habits and preferences in reaction to real-time game developments, and it can give consumers a potential advantage in cutting edge historical research and predictions.

• Shot: AI cannot ensure you get a Patrick Mahomes jersey immediately after his next Super Bowl win, which, unfortunately, for all of us Bills fans, feels inevitable What AI can do is personalize and expedite your shopping experience based on your historical habits, preferences, and current needs via personalized, concierge-like chatbots and multi-modal, high IQ search

• Shot: AI cannot automatically turn on your smart TV when a good game is about to start (or a good game is in progress!) What AI can do is create more engaging and expansive viewing experiences that cater to both naive and dedicated sports fans through real-time graphics/data and personalized multi-viewing.

• Chaser: Overall, the rapid integration of generative AI into the sports industry is transforming how fans engage with their favorite players, teams, and leagues. AI's influence on sports betting has made the process more strategic, personalized, and interactive, enhancing the overall experience for consumers. In sports retail, AI has streamlined and personalized the retail experience, ensuring fans spend less time searching for merchandise and more time enjoying their purchases. Additionally, AI-powered advancements in sports viewing are creating more immersive and customized experiences, catering to individual preferences and enhancing the overall enjoyment of live sports. As AI continues to evolve, sports fans can look forward to even more innovative and engaging ways to connect with the sports they love.

🤯 “Whoa” of the Week

Insane, mind-blowing things constantly happen in the sports business world. Here was my favorite of the past week.

1. Oh boy. On-court heading to court

💪 Weekly Reminder that Sports are Awesome

This newsletter is, of course, mostly centered on the business side of sports and the things that happen off the field. That being said, it’s important to remember why we fell in love with sports in the first place, though.

This section is meant to highlight the amazing things that happened in sports this week that serve as that reminder.

1. The Clippers new arena looks bananas

2. The Oregon Ducks announce their presence at the Big Ten Media Days

3. A very good bat doggo retires

Thanks for reading! Let me know what feedback you have.

Also, if you enjoyed this breakdown, please consider sharing it with your friends and network by clicking the social media icons at the top of the newsletter.

Until next time, sports fans!

-Alex