Toys”R”Us has spent just over $5 million on toys. But the mammoth payout isn’t for new stock: it’s for the Toys.com domain name.

The domain name originally belonged to the firm behind eToys, which went out of business last December. Toys”R”Us had already bought out the firm itself, along with its eToys.com Web site. However, the bankruptcy court handling the case decided to auction the more generic Toys.com domain.

The original auction – in which Toys”R”Us was a bidder – was won by the firm Faculty Lounge with a bid of $1.25 million. However, the court demanded a second auction, apparently believing the original hadn’t been publicized enough and that the sale price was far below the true market value.

Domainnamewire.com reports that in the new auction Faculty Lounge served as a stalking horse bidder. That means it simply made a bid to guarantee the auction would raise a set amount and left other firms to beat this figure. Faculty Lounge may have got a bonus payment from the higher sale price.

The lengthy auction saw most bidders drop out at the $3 million market, leaving a contest between Toys”R”Us and National A1, a firm which specializes in buying and selling high-value domain names. It decided on a $5 million ceiling, with Toys”R”Us paying an extra $100,000 over this to become the winner.

The price appears to be the highest paid for an Internet address in the past two years. It is likely tied for eighth in the all-time rankings, matching the only multi-word domain in the top ten, Asseenontv.com.

The only domains to beat this figure, all .com addresses, are (in ascending order) Casino, Beer, Business, Diamonds, Porn, Fund (which reportedly went for just fifty bucks under the $10 million mark) and Sex. The exact sale price for the last of these is disputed but is the only eight-figure sale in history.

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Entry was posted on Wednesday, March 4th, 2009 at 5:16 pm under Internet, Retail.

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