Domain Industry: It’s a Horse Race

by

Watching Big Brown win the Preakness yesterday reminded me how many similarities there is between the horse industry and the domain industry.

Like the domain industry, where we acquire our portfolio’s basically within the industry, be it at domain auctions, the daily drop auctions, major domain auctions like TRAFFIC, and private sales and purchase with others in the industry, the horse racing industry uses the same basis for acquiring and selling of its assets, horses.

Keeneland for those who do not know is THE auction house for the horseracing industry. Like TRAFFIC they have 3 major auctions a year; one for yearlings (unraced young horses) one for “Mixed Sale” and the “All Ages” auction.

There are horse auction all around the world, but there is nothing that can compare to Keeneland. You can call it our TRAFFIC auction.

However the sales are nothing like TRAFFIC. The Yearling auction in 2007 grossed $385 Million, the mixed sale auction grossed $350 Million and for the All Ages auction grossed $72 Million.

Like the domain industry auctions which is comprised of domainers and investors, the horse racing auction is made up of insiders, breeders, trainers, investors and new money under the guidance of the professionals that buy and sell to each other.

Like the domain industry there are great buys to be had at the auctions

Look at the history of Kentucky Derby and Preakness Winner and serious Triple Crown threat, Big Brown.

Big Brown was originally bought by a on the last day of Keeneland’s 2006 Yearling auction, by an Ocala Horseman who paid $60,000.

He sold Big Brown several months later for $190,000 in to Mr. Paul Pompa.

Within the next year, Mr. Pompa sold 75% interest in Big Brown for $3 Million dollars to International Equine Acquisition Holdings, a limited partnership started by Wall Street guys, when they raised 40 Million dollars from about 80 investors.

According to reports Big Brown’s value was 20 Million after he won the Florida derby a couple of months ago, 50 Million after His Kentucky Derby Win, 80 Million after yesterday’s victory and well in to the hundreds of millions if he wins the Belmont Stakes in June and becomes the first Horse to complete the triple crown in 30 Years.

Now most of you will point to the guy who sold the Big Brown for $190K and say “boy I bet he wishes he didn’t sell”.

However, I look at the people who bid on the horse before it got to $60K at the auction and stopped. They recognized something in the horse that got them bidding on it, but they it got too pricy for them, or the price surpassed what value they put on the horse.

How about the person who bid $59K for Big Brown, but would not go $61K?

How about all the people in the attendance at the auction who didn’t even bid on Big Brown. There were hundreds that didn’t even see the value in the opening bid.

This is the nature of buying and selling.

As domainers we all do this every day.

Hundreds of domains go to auction everyday at snapnames.com, namejet.com and pool.com.

For each domain, we all must decide is it worth $69, $250, $1,000, $5,000 or more.

We all see each one differently, we all value each differently and we each have the budget we feel comfortable with.

For the domains we already own, we all get offers.

Some of us get them daily.

For other’s domainers the offers just come in from time to time.

Each time we must make a call on whether to let the domain go, free up some capital to invest into other domains, or other projects, or to pass on the offer.

Each domain may become a “Big Brown” in someone else hands.

Over the years we have turned down offers on domains on which we never received other offers.

And yes we have sold our share of “Big Brown” domains, way too cheap. Domains that became a bargain for someone else.

Yes we have overpaid for many domains.

Yet when I look back over 11 years of Domaining, I find my only regrets are for the domains we didn’t purchase. The deals we didn’t do. The auctions we started but did not finish. The time’s we stopped at $59K and didn’t say $61K.

Guess that’s what makes a horse race.

The next race for us is Friday, in Orlando.

Good luck to everyone.

And good luck to Big Brown at the Belmont.

About Michael Berkens

Michael Berkens, Esq. is the founder and Editor-in-Chief of TheDomains.com. Michael is also the co-founder of Worldwide Media Inc. which sold around 70K domain to Godaddy.com in December 2015 and now owns around 8K domain names . Michael was also one of the 5 Judges selected for the the Verisign 30th Anniversary .Com contest.

Comments

  3. David J Castello says

    Actually, I do have my eye on Casino Drive (did great in the Peter Pan Stakes), but Big Brown simply annihilated the field in the Derby and Preakness. Will be interesting to see what he does if he’s really challenged eye-to-eye. Could be Seabiscuit-time.

  4. Ed - Michigan says

    Michael,
    Personally …I love the larger type used in the
    first half of your “TheDomains” blog.

    Easier on my “eye-to-eye” eyes.

    thank you, Ed – Michigan

  6. Tim says

    maybe in racing as well as domains its all in the “name”…big brown didn’t sound cool, if he had been named lightning he may have sold for more 🙂

  9. damir says

    Great point you make there – in many ways horse racing and buying / selling / investing into domain names is very similar

  10. Toonz says

    Great analogy Mike.

    The similarities are obvious but when one considers the bits that set domains apart from horses, it gets even better…

    As you know, I know a little something about the horse industry having grown up in that business.

    First off, the NY guys are doing some fuzzy math regarding BB’s future value, which is to be expected. I’ll happily explain that part to anyone that cares to talk about it but that isn’t my point with this post.

    Consider these major differences that make domains superior to horseflesh:

    1. Domains don’t have mortality, horses do.

    2. Domains do not risk breaking a leg, losing an eye, eating bad stuff and dying unexpectedly or having to be “put down” – unless, of course, one lives on the edge and registers UDRP baiting TM type names…

    3. Horses are bought and sold using “pedigree” information and visual confirmation that the horse MAY outperform its peers. Prior earnings of horses in no way garantee future earnings, they indicate future earnings may be possible but any number of things can end that with a horse.

    Domains are vetted by buyers/sellers much the same way but the prior earnings are far more indicative of future earnings than with a horse, as the mortality risks are not there and domains do not get old and need to be put out to pasture.

    4. Horses require 24/7 care and feeding. Horses incur monthly training/feed/boarding/veterinary bills. Domains have some regular expenses, but nothing comparatively.

    5. Due to the constant attention horses require, trips to Hawaii or family vacations are out of the question unless you are paying someone else to do everything. Might be noted at this point that if one does not actively participate in a rather high percentage of this job, one loses any tax advantages to this game as well. Domains, on the other hand, set us free to go and do whatever we need to. We are not locked to one location. How may of us have actually done business from a laptop at some exotic location at least once, hmm?

    6. As I said, I was raised in the horse business and I can tell you with no reservations that domains are far easier to clean up after! OK, some might get messy but if you picked those in the first place you kin of asked for it.