ICANN published its draft budget last night and will open the public comment period on May 25th.

It will approve the budget at the Prague ICANN meeting in June

I went through the budget an found some pretty  interesting things.

While everyone has a top 10, I thought I would go with a top 11:

1.   ICANN needs a new financial planner:

“As of 31 March 2012, the Reserve Fund balance was $52.3 million.

Total investment income for FY13 is budgeted to be $1.0 million”

So less than a 2% return is budgeted.

Since you can find a 5 year CD paying out about 2% if you can’t do better than a 2% return on investment you should find another guy to handle your investments.

In its annual report ICANN had almost $100 million in cash but I guess only 1/2 of that is in the “reserve fund”

2.  When Cost of Living is only going up by 3.6% how does ICANN justify budget increases of 18% and 31% and 39%

The cost of living adjustment issued for 2012 by the US Government is at 3.6% (they haven’t announced 2013 yet)

However ICANN budget includes:

“”FY13 operating expenses are budgeted to be $74 million (without contingency) an increase of 18% over FY12’s forecast.

“FY13 administration costs are expected to increase by 31%.”

“Professional Service costs for FY13’s budget are $20.6 million; a 39.3 percent increase over FY12’s forecast.”

3.  ICANN is a pretty good place to work

As of May 1, 2012, ICANN has 143 employees.

Here are some of the perks an employee gets:

“US-based staff members are entitled to three weeks’ vacation per year for their first five years (and four weeks per year after that).”

“Staff members are eligible to earn a bonus based on achievement of specifically defined performance targets”

“ICANN has a retirement program which they allocate 7% of gross total compensation to”

“Other Personnel Costs are approximately 10% percent of gross  include medical/dental insurance premiums, recruitment and relocation costs.”

4.  ICANN spends a lot on its conferences:

ICANN meeting’s core functions typically cost over $1.5 million per meeting and include:Venue costs including meeting space, audio-visual, technical support functions, power, bandwidth connectivity, and backup provisions which are estimated at about $750,000 per meeting.

“Food and catering, registration administration, printing, office supplies, and shipping are estimated at $250,000 per meeting”

“Meeting interpretation, scribe services, pre-meeting site inspections, and professional planning services are estimated at $500,000 per meeting”

Keep in mind that “Local sponsors typically pay for gala and other costs”
ICANN staff also get free airfare, room and a per diem allowance for attending conferences:

“Airfare costs average $2500 and are adjusted up or down depending on the venue and class of travel.”
“Lodging costs average $250 per night for the seven-day ICANN meeting. This is adjusted up or down depending on the venue, the negotiated hotel rates, and the length of time that the traveler is required to stay for ICANN business”

“Per diems average $90 per day or $500 per stipend, and are adjusted up or down depending on international guidelines for the city in which the meeting takes place.”

5.  ICANN has some nice offices.

“Facilities, with an FY13 budget of $2.6 million includes:

Office rent for Playa Vista
Office rent for Palo Alto
Office rent for Washington D.C
Office rent for Brussels
Office rent for Sydney

“”ICANN, a non-profit public benefit corporation, maintains its corporate headquarters at its Playa Vista (PV) location at 12025 Waterfront Drive, Playa Vista, California 90094. ”

“The occupancy agreement for office space in Playa Vista was executed in November 2011 and approved by the Board. This agreement term began on 1 July 2012 and expires in June 2022; calls for occupancy of 30,300 square feet and total costs for PV occupancy are expected in FY13 to be $1.3m. The increase over FY12 is due to the larger amount of space leased as well as the cost of completing tenant improvements in the new space.”

“Occupancy in the new space is scheduled for 18 June 2012, prior to actual lease inception under terms negotiated with the Landlord. ICANN also maintains branch offices in Brussels, Sydney, Washington D.C., and Palo Alto.

“Staff in Sydney has had office space provided since January 2007. In January 2008, a multi-year lease was executed with plans to expand ICANN’s operations in Sydney to support the Asian regions and time zones. The current lease expires February 2013. The FY13 Budget of $155k has an 8 percent increase as part of the annual escalation clause increasing the rent each year under the lease term.”
“The Brussels office FY13 occupancy costs are anticipated to be increased for the fiscal year on an overall basis but reduced significantly on a per square meter basis. The change in cost is a result of moving from space leased through an “office suites” provider (estimated at approximately 100 square meters) to space directly leased from the Landlord (approximately 566 square meters). The new lease began 1 June 2012 and is a nine year lease with termination provisions after three and six years. Annual rent adjustments in Belgium are based on governmental indexations.”

“The Washington D.C. office opened at the end of FY10.”

“FY13 is budgeted at $457k based on the multi-year lease arrangement (through 2017). This lease contains a predetermined annual rent increase.”

The Palo Alto office opened in September 2010. FY13 is anticipated to have occupancy costs of $410k. This lease contains a predetermined annual rent increase.”

6. ICANN has budgeted less to for the Trademark Clearing house and Uniform Rapid Suspension system than its budgeted for “bad debt”Under the YR 13 budget ICANN has a expense item for bad debt.

I’m not exactly sure how ICANN get stuck with any bad debt but they have $900K allocated for it.

However that is hundreds of thousands of dollars more than what ICANN has budgeted for the Trademark Clearinghouse and the URS both which were demanded by trademark interests in the new gTLD program:

“Trademark Clearinghouse – $438K

“Implement Trademark Clearinghouse to support rights protection mechanisms in New gTLD registries by working with service providers to build key Clearinghouse processes, complete required contract execution with service providers, and execute process testing phase with participation from stakeholders along with communications and outreach activities.”

Uniform Rapid Suspension (URS) – $175K

“At present there is a significant gap between the features specified for the URS procedure and the desired cost. ”

“In order to bridge this gap we will: hold two summit sessions to reconfigure the URS to arrive at a lower cost model (one session in FY12 budget and another in this FY13 plan), conduct a process to develop and finalize URS Model in consultation with current UDRP providers and community members; and conduct RFP based on URS Model and select URS providers. The goal is have a URS program in place and providers contracted and onboard by June 2013.””

7.  ICANN’s budget provides for less than a $1 Million dollars coming in from contested string auctions.

As we have noted before although the ICANN Guidebook calls for strings with more than 1 application to be settle by auction, ICANN budget provides less than $1M in revenue coming from these auctions, of  which some have predicted could run $10M or more per string.

8. Of the $185,000 application fee 33% is being held for “Risk Contingency Fund”, sounds like they expect a problem.

Well  they already have a problem, as the TAS system is still down and confidential information has been leaked.

9.  If there are excess funds from the new gTLD program returning the funds to those that paid it, doesn’t seem to be an option:

“Although the New gTLD Application fee structure was calculated based on the principles of cost recovery, the possibility exists that a surplus of funds may be realized either during the application processing period or upon its completion. This surplus may exist as a result of any of the following:

Unused risk contingency funds

Lower than expected application processing costs

An over-allocation of historical development repayment funds, and

Any potential auction proceeds

In the event that the New gTLD Program results in a surplus of funds from any source, staff will initiate a policy development process to define with the community the purpose and mechanism of administration of such excess.”

How about returning the excess funds to those that paid the excess funds?

10. ICANN expects . a boom in com/.net registrations

In the budget ICANN calls for 133 Million registrations of .com and .net in 2013

According to the last Verisign report there were 116 Million .com/.net registrations in the quarter ending in March 2012.

In the March Verisign report the number of .com/net registration grew by 8%.

Another 8% year over year registration would take you to somewhere around 120 Million registrations.

Guess we will see.

11. ICANN predicting that there will be more .Name domain name registrations than .XXX registrations.

According to the budget, ICANN is anticipating 250,400 .name registrations in 2013 and only 204,400 .XXX registrations.