38 Studios head accuses RI government of breaking promises, scaring investors

Curt Schilling has criticized Rhode Island's role in 38 Studios' recent problems, claiming that the state economic board reneged on a deal and Governor Chafee's remarks ruined a potentially lucrative sequel deal for Reckoning.

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Update: Rhode Island Gov. Lincoln Chafee has disputed Schilling's account of the business dealings. He also told The Associated Press that he is more interested in protecting Rhode Island taxpayers than in responding to Schilling's claims.

Original Story: 38 Studios head Curt Schilling has some harsh words for Rhode Island in the wake of extreme lay-offs to both the parent company and Big Huge Games, which made Kingdoms of Amalur: Reckoning. The baseball player turned video game executive says that state officials went back on a deal, and that comments from Governor Chafee scared off private investors.

The Providence Journal reports that Schilling says the economic development officials reneged on plans to approve film tax credits, which would have let the company defer the $1.12 million payment that was due at the start of May. That would have allowed the company to pay employees on May 15, rather than missing payroll.

Schilling also claims that Chafee's "devastating" remarks about the studio's health scared off a potentially lucrative deal. Within a few days of the governor claiming the studio was at risk of becoming insolvent, Schilling claims that a video game publisher pulled out of a $35 million deal to make a sequel to Reckoning.

According to Schilling, he has a personal stake in the studio's demise too; he stands to lose $50 million of his personal fortune, accrued from his days as a professional baseball player.

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From The Chatty
  • reply
    May 29, 2012 10:00 AM

    Steve Watts posted a new article, 38 Studios head accuses RI government of breaking promises, scaring investors.

    Curt Schilling has criticized Rhode Island's role in 38 Studios' recent problems, claiming that the state economic board reneged on a deal and Governor Chafee's remarks ruined a potentially lucrative sequel deal for Reckoning.

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      May 29, 2012 10:16 AM

      if schilling wore the bloody sock to the meetings then maybe 38 could have won the gaming world series like the redsox

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      May 29, 2012 10:21 AM

      :( brutal this just gets worse, maybe someone had a grudge against the dude and wanted to see him sink, well if that is true they sure succeeded but at the cost of screwing a shit load of people and killing a rad IP.

      Who knows what happened he should sue the state officials(yeah right) in damages and re open the studio if its true, then again I am sure they would bleed him dry of funds and he be even worse off :(

      Horrible :( so sad.

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        May 29, 2012 11:13 AM

        A grudge? Sounds like he ran the company into the ground. He owed a million dollars in taxes.
        It sucks that those people lost their jobs, but I am so sick of "economic development" shenanigans fucking the taxpayers. It's practically routine here in Portland.

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          May 29, 2012 11:37 AM

          I agree. They flushed a vast amount of cash and only have a mediocre fantasy game to show for it.

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            May 29, 2012 11:51 AM

            And that game was mostly done when they bought Big Huge Games. Most of the money went into the unreleased MMO

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        May 29, 2012 11:21 AM

        Is there some kind of evidence that external forces sank 38?

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          May 29, 2012 11:45 AM

          obviously external forces prevented KOA from selling 2.5 million more copies to hit that 3 million mark.

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        May 29, 2012 5:55 PM

        It's not sad, he's just not good at business or making games. It's that simple.

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        May 29, 2012 6:11 PM

        No one had a grudge against him. Schilling is a god damn hero up here dude. They had 400 employees and were using $4 million a month. They used $51 million of the $75 million loan ALREADY. In a year. How much money did they waste the last 5 years?

        Oh, and they never even shipped a product. They had nothing to do with Reckoning besides ruining another studio from 500 miles away.

        I was a big supporter of 38 Studios but fucking c'mon, for him to say that shit about RI and the Gov is just childish. He ran that company into the ground. He made sure he got paid and $5 million to R.A Salvatore too. Fuck. Everything about this pisses me off.

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      May 29, 2012 10:24 AM

      Interesting, grabbing popcorn.

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      May 29, 2012 10:43 AM

      Everything about this story indicates that the company was poorly managed, financially, and was burning money far too fast for 1.5 million dollars to make any kind of difference. Inking a new 35 million dollar deal for a Reckoning sequel would not have helped unless they planned on cheating their investors and underspending on the sequel to keep the MMO project going.

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        May 29, 2012 10:54 AM

        Yep, I've seen their monthly burn rate listed at $4M which means they would have needed a ton of cash to remain viable.

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      May 29, 2012 10:50 AM

      This is the first time I've read that Schilling put in $50M of his own money, which makes me say "yeah, that probably didn't happen."

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      May 29, 2012 11:44 AM

      4 million dollars A MONTH on this company and he has the balls to put the blame on someone else?

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      May 29, 2012 11:50 AM

      It sounds more like bad management the more I read into it.

      They had hundreds of employees retained for an MMO without funding.

      The game they did put out didn't sell well enough to retain those employees and instead of trimming down the company until funding is found they ran it into the ground so everyone lost their job.

      I know everyone hates lay offs for developers but this is an example why it is used so much in the industry.

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      May 29, 2012 1:57 PM

      The fact that they were depending on ANOTHER tax break to let them defer payment on the loan so they could continue to make payroll screams financial mismanagement. It really really feels like they're playing a shell game.

      Lets look at some numbers:
      1. Not enough cash-on-hand to pay $1.12M loan payment AND cover payroll for the last month.
      2. Estimated $4M/month burn rate
      3. Depending on a $35M publishing deal that hadn't closed by the time they started to miss payroll to cover loan payments and continued operations.

      Basically, the employees were screwed by management before the state "screwed them over" by poisoning their publisher deal, or by failing to get the tax break. Even if the state did everything to make life easier for 38 Studios, they still wouldn't have paid their employees for several weeks.

      Yeah, go ahead and blame the state, that makes complete sense.

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        May 29, 2012 4:55 PM

        Indeed. I don't consider a company "solvent" if their current runway makes it an open question whether they make payroll.

        I hope that this situation is properly adjudicated in the courts and that Schilling be made to answer for his corporate malfeasance. I had been hoping that his first public comment would be something to the effect of "I'm sorry" but I guess he's just not that type of person.

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      May 29, 2012 4:57 PM

      wait, the company is now talking shit to the entity that is funding them??? what the fuck is going on there

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        May 30, 2012 9:22 AM

        Public officials investing tax dollars into private endeavors, which should be illegal. It wasn't a scandal waiting to happen, it was a scandal in its conception. Its like corruption straight out of florida.