- Jul 1, 2022
Report: Vegas.com Bought LasVegas.com in 2005 For Up To $90 Million DollarsGeorge Kirikos spotted an SEC document showing that Vegas.com purchased LasVegas.com in 2005, for what could be up to a $90 Million Dollars.
In June 2005, VEGAS.com, LLC entered into an agreement for the purchase of LasVegas.com. The agreement specified that a $12,000,000, one-time payment be made upon execution of the agreement along with monthly payments of approximately $83,000 for 36 months, $125,000 for the next 60 months, and then $208,000 for the next 36 months. Per the terms of the agreement, after June 30, 2016, following the 132 initial monthly payments, VEGAS.com, LLC in its sole discretion may terminate the agreement and forfeit the domain name. If VEGAS.com, LLC chooses not to terminate the agreement, they will continue making the monthly payments of approximately $208,000 until June 30, 2040, at which time the seller will transfer the domain name to VEGAS.com, LLC without further payment or cost to VEGAS.com, LLC. As of June 2005, the present value of the future payment obligations was determined to be approximately $12,264,000, using a discount rate of 6.25 percent. The initial $12,000,000 payment has been capitalized and is being amortized over 35 years, which is the term of the agreement. The present value of the future purchase obligation of approximately $12,264,000 was capitalized and is being amortized beginning July 2005 and ending June 2016, which is the period that VEGAS.com, LLC is legally bound by the agreement to continue making payments. Subsequent to June 2016, the agreement will continue on a month to month basis until June 30, 2040, and all payments made will be recognized as an expense. Source.
Wow, the only thing I can think is that LasVegas.com was already raking in a ton of cash from the site, and that this valuation would have taken all that into consideration, paying out the owners more than they were already making, plus projected growth, forever, etc... So the owner probably said, I'm making $1M+/year now, So I obviously need much more than that, forever, to consider selling it. They used a lower initial monthly amount to allow the buyer to test the domain/traffic/monetization out and have a few years to decide if they would continue, and if so, it would escalate from there. I can only assume that both parties were ultimately very happy with the outcome.
Interesting. In any case, clearly they were making some very good money off it to come up with that kind of valuation.I think they were leasing it, and then there was a lawsuit/dispute of some kind, and they settled it with the longer term purchase agreement spread over 35 years.