Could this be the grand finale of the Jeff Baron domain saga? As covered last year by TheDomains in a post titled “He Once Had Over 1 Million Domains & Made $1.5 Million A Month, Now This Domainer is On The Verge Of Losing It All”. It appears the last of the domain portfolio owned by Baron’s Ondova Limited Company will be up for sale in a court ordered domain sale.
By visiting CourtOrderedDomainSale.com you will learn that two portfolios of so called ‘premium’ domain names will be up for auction on November 9th in downtown Dallas, Texas. There are two portfolios up for sale. According to the website the portfolios breakdown like this:
Portfolio A:
3,000 premium domain names
Average net revenue from 9/30/11 – 10/1/2012 $119 per domain
Total net revenue (same dates) $399k (approximate)
Portfolio B:
153,000 domain names
Average net revenue from 9/30/11 – 10/1/2012 $3.80 per domain
Total net revenue (same dates) $581k (approximate)
Despite the sale breaking down the domains into two portfolios, from what I understand the auction is for both portfolios. There is a $500,000 cash deposit required to qualify for bidding. Only those that have put forth the deposit and sign an NDA will have access to the full list of domain names being auctioned off. The auction organizers have set forth a minimum bid amount of $4.3 million. Speculators commenting in the most recent TheDomains post on the auction divulge some of the names they believe will be part of the auction which includes many solid one word .coms but also a lot of typo/TM type names.
Assuming you must bid to buy both portfolios, the renewals on all 156k domains would be approximately $1.25 million with annual net revenue equaling only $980k. If you can bid to buy the portfolios separately, portfolio A would be much more attractive with revenue bringing in 20x annual renewal fees. Also, portfolio A is labelled ‘premium’ by auction organizers. Portfolio B simply labelled ‘domain names’ would cost more that $1.2m in yearly renewals and bring in only approx $581k annually.
Honestly, I think this whole auction is ridiculous. How can you expect anyone in their right mind to put down half a million before even seeing a list of names they would be bidding on? I am concluding that Portfolio B is a bunch of typo/TM .coms that are no longer earning as much in PPC as years past and have no resale value. If you are committed to bidding on both portfolios there would be no upside to participating in this auction.
Scenario 1:
Buy both A and B for $5m (for example)
Keep 1% of portfolio B, and all of portfolio A
Renewal cost = 3000 domains + 1530 domains = renewal cost $45300
Revenue = portfolio A $399k + portfolio B $5800 (1% of $581k) = $404k per year
Drop 151500 not so good domains from portfolio B
So for $5m investment, somewhat guaranteed revenue of $400k per year with renewal cost of $45k
Annual return on investment -> 7.1%
Plus,
Potential sales per year from so called premium portfolio A
Plus,
Before dropping the 151,500 domains from portfolio B, potential parking revenue on the final year = let’s say 30% of $581k = $190k (due to some domains expiring soon after auction)
Could be one way of thinking
(Apologies for any typing errors from iPhone)
That would be an interesting strategy Fakz, thanks for sharing your idea! The problem I see with that is forking out $5m up front meaning you’re paying 5 years revenue with no guarantee that the revenue exists or stays the same. The ppc revenue is most likely not going to increase over time.
Today was the sale, I wonder if anyone purchased it.