Company converts license into domain acquisition.
Event ticket seller Vivid Seats (NASDAQ: SEAT) disclosed a $17.3 million domain name acquisition in its latest annual report.
On October 22, 2024, we acquired a domain name that we had previously licensed (the “Acquired Domain Name”). In exchange for the Acquired Domain Name, we are required to disburse monthly interest-free cash payments totaling $31.4 million through June 2040 (the “Acquired Domain Name Obligation”).
We account for the Acquired Domain Name as a definite-lived intangible asset under ASC Topic 350, Intangibles—Goodwill and Other. The acquisition cost of the Acquired Domain Name was $17.3 million, which will be amortized over a period of 15.6 years (the “Acquired Domain Name Term”). As of December 31, 2024, the Acquired Domain Name had a carrying value of $17.3 million, which is recorded in Intangible assets – net in the Consolidated Balance Sheets.
As best I can tell, the acquisition is a conversion of a license it entered into in 2005.
In the company’s prospectus filed in 2023, Vivid Seats stated:
In 2005, the Company entered into an agreement for use of an internet domain name with an unrelated party. Under the terms of the agreement, the Company is obligated to pay approximately $2,500,000 per year until the agreement expires in 2040. The Company has the option to terminate the agreement at any time, provided they operate the domain for a period of thirty days after termination.
Because that leased domain had an expiration date, it makes sense that the company would want to lock up the domain even if it has to pay substantially more per year.
Given the dates, it suggests that this mammoth payment is for the domain vividseats.com. What’s confusing is that the domain was registered to VividSeat’s founder, Jerry Bednyak, before 2005. It would seem this would have made him a related party. This would also make it more than just about a domain name.
The company also owns Vegas.com, but that was through an acquisition announced in November 2023.