Archive for the ‘Curt Schilling’ Category

How Former Boston Red Sox Pitcher (allegedly) Cost Rhode Island Taxpayers $75 Million

Monday, July 16th, 2012

During his heyday as pitcher for the Boston Red Sox Curt Schilling always had a reputation for shooting his mouth off; for going against the grain. But with 216 wins and three World Series titles under his belt, Schilling could afford to be outspoken – or arrogant, as his critics would put it. Recurring injuries caused him to retire from the sport in 2009, but Schilling remained in the public eye thanks to his tireless political advocacy supporting Republican candidates for office as well as his frequent media appearances.

Schilling has always been an avid gamer, starting with tabletop pen and paper war-games and eventually moving on to more advanced computer games. Of particular interest to Schilling were MMORPG’s (massive multiplayer online role playing games) such as Everquest and World of Warcraft, where thousands of players across the world simultaneously take part in adventures in a persistent virtual world.

Schilling, whose estimated net worth was $50 million at the time of his retirement, decided to make the jump from game player to game developer in 2005. His plans were nothing if not ambitious – Schilling recruited bestselling fantasy author R. A. Salvatore, comic book legend/entrepreneur Todd McFarlane and former executives from Comcast and Electronic Arts, placing them in key positions in his new company.

Initially called Green Monster Games, Schilling’s game development company changed its name to 38 Studios in early 2007; the 38 being a reference to Schilling’s jersey number. 38 Studios continued to expand throughout 2007 and 2008, acquiring developer Big Huge Games from publisher THQ in May 2009.

Originally headquartered in a 30,000 square foot office complex in Maynard, Massachusetts, executives in 38 Studios announced that the company was going to relocate to Providence, Rhode Island in 2010. What prompted his sudden relocation? A $75 million enticement in the form of a guaranteed loan from the Rhode Island Economic Development Corporation. The RIEDC describes itself, according to its website, as a “quasi-public agency, the Corporation serves as a government and community resource to help streamline the business expansion in, and relocation to, Rhode Island.”

The $75 million loan guarantee was strongly supported by then Republican Governor Donald Carcieri, was touted as a ‘job creating initiative.’ 38 Studios executives promised to bring 450 direct jobs to Rhode Island as part of the loan agreement.

Now would be a good time to point out that although 38 Studios was established in 2006, continued to expand as a company up to 2009, negotiated the loan agreement with Rhode Island in 2010 and relocated to Providence by mid 2011, they had yet to release a single game amid all this corporate maneuvering.

The average big budget game (or AAA games, as they are known in the industry) typically takes between 2 and 3 years to complete, has a staff of hundreds of developers working on it and requires budgets nearing hundreds of millions of dollars (source). While video games are a $75 billion industry (according to 2011 figures from Gartner Inc), the vast majority of AAA games barely break even or fail to make a profit. Most big publishers stick with established franchises that are known sellers, making new intellectual properties a tough sell.

38 Studios released their first game, Kingdoms of Amalur: Reckoning, in February 2012. A single-player action role-playing game from a new developer was always going to have a tough time in a market dominated by military first-person-shooters, MMORPGs and casual smart-phone games, and that is the unfortunate fate that befell the ambitious Kingdoms of Amalur. While the game was fairly well reviewed (Metacritic score: 80%), it was a financial disaster. The game sold 1.2 million copies since launch, far short of the 3 million retail copies it needed to sell just to break even on development costs.

In the wake of the lukewarm reception Kingdoms of Amalur got from the market, officials in the Rhode Island governor’s office began to grow increasingly concerned over their $75 million investment in Curt Schilling’s company. 38 Studios missed a scheduled loan payment in May 2012, and it was revealed that the company failed to make payroll that month. Emergency meetings between current governor Lincoln Chafee and the Rhode Island Economic Development Corporation were held to discuss with the impending crisis. Accusations and counter accusations were thrown about in the press, but by this point the writing was on the wall. In May 24, 2012 38 Studios closed its doors and filed for Chapter-7 bankruptcy.

Although the studio closed down, the matter is far from settled. It was announced in early June that “Rhode Island state police, the attorney general’s office, the U.S. Attorney’s office, and the FBI are launching investigations into the company.”

Emails obtained by the Associated Press later revealed that an official with the RIEDC who was involved in finalizing the $75 million deal contacted 38 Studios’ chief financial officer for a possible executive level position in the company. As a result of the scandal, the entire board of directors of the Rhode Island Economic Development Corporation have either resigned outright or are looking to leave once their terms are up (source).

Investigations into the company are currently underway – expect more political fallout and possible criminal charges before the dust settles.