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ICANN budgets for 2,000 new gTLDs

Kevin Murphy, May 2, 2012, 13:56:42 (UTC), Domain Policy

ICANN could net $150 million from a 2,000-application new gTLD round.

That’s according to a proposed budget published for comment last night, which for the first time contemplates more than 500 new generic top-level domain applications.

The budget also contains budgets for 500-application and 1,000-application rounds.

But with ICANN revealing this week that it has 1,268 registered users of its TLD Application System, 2,000 applications is beginning to look extremely plausible.

ICANN would receive $368 million in fees from a 2,000-app round, according to the budget, of which an estimated $33 million would be returned in refunds when applicants withdraw.

But the operating cost of the program would only come in at $156 million – slightly cheaper on a per-application basis than a 500-app round due to volume discounts from its contractors.

What happens to the rest of the money?

About $30 million is returned to the ICANN contingency fund to recoup program development costs. A $31 million surplus could be considered “profit” – it’s budgeted as an increase in net assets.

But the majority – $120 million – is budgeted to the amorphous “risk costs” line item.

The risk fund – sometimes flippantly referred to as the legal war chest – was budgeted to cover unanticipated costs such as delays and litigation.

ICANN evidently does not anticipate any economies of scale here. The $120 million in the budget is a simple multiple of the $30 million it said it needed to cover risk in a 500-application round.

It’s quite possible that ICANN won’t even need to dip into the risk fund, or that it might only need to withdraw a small amount, which would leave it sitting on an embarrassingly large wedge of cash.

The organization has yet to decide how its surplus would be deployed, but it’s going to be kept in a separate bank account and accounted for separately.

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Comments (5)

  1. In unrelated news, Jones Day opened up another case of champagne. 🙂

  2. KD says:

    How long does this money sit in the risk fund? After, say, 5 years does this magically move into ICANN’s bank account? (not like ICANN would need the cash)

    I also assume this large amount of money won’t be reported as cash assets on the companies books which is very deceiving.

  3. Matrin Leos says:

    with 2,000 applications, US$ 30m already spend for the new gtld program, US$ 60,000 evaluation fee and US$ 60,000 reserve there should be a refund at the end of the day which could range between US$ 50k and 100k for every application. this already assumes that a part of the reserve is used by icann to cover lawsuits.

  4. Severin M. says:

    … and ICANN will have $ 700k per month on accrued interest when it gets 2% interest rate.

  5. KD says:

    Severin.. interesting point. At 5% return per year, 120 million turns into 6 million in interest in the first year. In 15 years this $120 million will turn into $237 million. ICANN does not have to work a day in it’s life going forward…

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