Remember Curt Schilling? Bloody Sock Curt Schilling who pitched two gems and helped lead the Boston Red Sox to the team's first World Series in a century? Well a while back he managed to convince the state of Rhode Island to guarantee a $75 million dollar loan in a deal to relocate his video game company to the state along with 400 jobs. Anyway he should have stuck to baseball because he just bounced a million dollar check to the state, which may now be on the hook for the whole lot...
By: DAVID KLEPPER | Associated Press
Published: May 17, 2012
Updated: May 17, 2012 - 6:02 PM
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PROVIDENCE --
The troubled video game company helmed by former Red Sox pitcher Curt Schilling delivered a $1.1 million payment to Rhode Island Thursday, but the state economic development agency returned the check after learning it would bounce.
38 Studio's failure to pay the amount when it was due May 1 has prompted worries about its solvency and the possibility the state might have to step in to pay its debts.
Gov. Lincoln Chafee had said Schilling's company - which got a $75 million loan guarantee from the state in 2010 - planned to make the scheduled payment Thursday. He said the payment would be a "positive step."
38 Studios hand-delivered the check Thursday evening to the state's Economic Development Corp. It was returned after the company's chief financial officer acknowledged the company had insufficient funds to cover the payment.
The agency "remains willing to accept readily available funds," according to a statement from Chafee.
The company relocated from Massachusetts in 2010 after Rhode Island offered the loan guarantee, which state officials said would means hundreds of jobs and millions of dollars in tax revenue.
38 Studios on Wednesday asked the economic agency for additional assistance after missing the scheduled payment, but the agency's board did not act on the request.
Chafee would not describe the details of the request after an emergency board meeting Wednesday. But he said Thursday that the board agreed "unanimously" not to give the company additional taxpayer support.
"I fought very hard to not have further taxpayer investment," Chafee said at the State House. "No taxpayer concessions were made yesterday. So this is positive."
He said he did not know where the funds for the $1.1 million payment originated and if it was Schilling's personal money.
Chong told The Associated Press that 38 Studios informed the Economic Development Corp. that it would be unable to make its payroll this week.
As worries over the company's future mounted, Keith Stokes, the Economic Development Corp.'s executive director, submitted his resignation to Chafee, who accepted it Wednesday. The governor thanked Stokes for his service.
"Keith is committed to seeing Rhode Island succeed and I am confident that he will continue to be very involved in the state he loves," Chafee said.
Stokes told NBC 10 his resignation was a mutual decision between him and the governor. He refused to say if he felt personally responsible because he championed the loan deal for 38 Studios.
"It's really unfair for me to comment on 38 Studios transactions. We had an executive session, there's confidential proprietary discussions going on. So, it wouldn't be fair for me to comment on that," Stokes said.
Stokes said he has no regrets.
"There's always risk and rewards. And again, I've got complete confidence in EDC. We've got a great team. Gov. Chafee is leading that board. I had an opportunity to build a good team there, that team will continue to do well," Stokes said.
Chafee has asked Colin Kane, a real estate developer who is chairman of a commission that is overseeing redevelopment of a key parcel in downtown Providence, to replace Stokes on an interim basis. Negotiations are ongoing over compensation, Chafee said.
Kane did not immediately respond to a message left for comment.
Lawmaker proposing limits on RI loan guarantees
Stokes said the legislation that allowed the Economic Development Corp. to back up to $125 million in loans was not intended for a single company and that other firms have benefited from the program. Since Chafee took office, the board has adopted a new policy that caps the amount that any company can receive in loan guarantees at $10 million.
After the loan guarantee was approved in 2010, Stokes called it a calculated risk "well worth taking." He said the board performed months of due diligence in analyzing the video game sector and 38 Studios and crafted an agreement that went "to great lengths to safeguard taxpayers and ensure economic performance."
General Treasurer Gina Raimondo said funding private enterprise may not be worth the risk.
"I don't think the government should be in the business of venture capital. It's a high risk business and so I question whether it's the right place for government to be," Raimondo told NBC 10 News.
But Raimondo said she isn't criticizing anybody now.
"Everyone has to come together. The governor, the General Assembly, the EDC, the treasurer. We got to get in the boat, come together and find a solution," Raimondo said.
Stokes was appointed head of the Economic Development Corp. by Republican Gov. Donald Carcieri in 2010 after serving 15 years as executive director of the Newport County Chamber of Commerce. Stokes also served on the Economic Development Corp. board for 16 years, and he said he was involved in every major development project over that time.
Chafee kept Stokes on when he took office last year despite misgivings about the loan guarantee for 38 Studios. Chafee, an independent, was a vocal critic of the guarantee, saying on the campaign trail he thought it was "one of the biggest risks I've ever seen."
In a statement, House Speaker Gordon Fox called Stokes a "tireless advocate" for Rhode Island's economy and a man of "great vision" and courage. Senate President Teresa Paiva Weed said Stokes' resignation leaves a void that will be hard to fill.
Neither legislator mentioned 38 Studios.
Leonard Lardaro, an economics professor at the University of Rhode Island, called Stokes' resignation "ridiculous," saying he is being held responsible for the mistakes of political leaders like Carcieri, who pushed for the deal with 38 Studios.
"He is absolutely first-rate," Lardaro said of Stokes. "We can't afford to lose really good people like that. We're not going to get anyone better."
Carcieri has not returned a message left for comment. No one answered the door at his North Kingstown home on Thursday.
Associated Press writer Laura Crimaldi and NBC 10 News reporters Bill Rappleye and Parker Gavigan contributed to this report.
"This business will get out of control. It will get out of control and we’ll be lucky to live through it.” -Tom Clancy
Interestingly, if 38 Studios can't pay the balance, Rhode Island becomes the owner of all the studio's intellectual properties.
Mayabird is my girlfriend
Justice League:BotM:MM:SDnet City Watch:Cybertron's Finest "Well then, science is bullshit. "
-revprez, with yet another brilliant rebuttal.
Yeah, this has been on the Amalur forums. I recently restarted playing video games, and on the recommendation of the game store I played Reckoning : Kingdoms of Amalur. It certainly was entertaining and I got both DLC expansions.
Its sad to see them in trouble especially when from what we see, the product was likely profitable (the money drain is not from the Amalur game, its from the MMORPG they were developing which might never finish now).
Hope something works out so I can get to play further adventures in amalur.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
Their problem was trying to make an MMO right off the bat - these days they seem to never be under $100 million in development costs.
Their other problem was setting the MMO in Amalur. The game was fun, sure, but the setting is so generic, Fae Houses aside. I couldn't tell you what the difference was between any of the races in the game, much less why they're different.
Mayabird is my girlfriend
Justice League:BotM:MM:SDnet City Watch:Cybertron's Finest "Well then, science is bullshit. "
-revprez, with yet another brilliant rebuttal.
DPDarkPrimus wrote:Their problem was trying to make an MMO right off the bat - these days they seem to never be under $100 million in development costs.
Their other problem was setting the MMO in Amalur. The game was fun, sure, but the setting is so generic, Fae Houses aside. I couldn't tell you what the difference was between any of the races in the game, much less why they're different.
Hmm. To each his own, although while it was certainly generic aside from the Fae houses, I could tell which race was which. The back story available on their website is certainly interesting enough to hold my attention.
Also its hard to say the problem was setting the MMO in Amalur when it appears they didn't have the money to complete the MMO, ergo we won't know how well its going to turn out. For the record I have never played an MMO since I prefer being the lone hero, breaking the game and all that nice things you do with hex editors... but I was semi considering giving the MMO a try if it was anything like the video game.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
Whether this means they can still go on remains to be seen. I will have a browse on the Amalur board later on to see if there is any news.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
38 Studios And Big Huge Games Lay Off All Staff
By John Walker on May 24th, 2012 at 10:46 pm
In incredibly bad news, it’s been announced tonight that 38 Studios, and its wholly owned subsidiary Big Huge Games (Age Of Empires III, Rise Of Nations), are laying off their entire workforce. The Curt Schilling-owned enterprise was in a noticeably shaky state earlier this month when it was unable to make a repayment for a massive $75m loan it had taken from Rhode Island state in 2010, despite decent sales of Kingdoms Of Amular, and great promises of an MMO to come. Having just managed to make this repayment, staff began to notice that something was still up as paychecks failed to arrive in bank accounts, and health insurances were running out. And now, in a rather unpleasantly brisk email, they’ve learned that all 379 of them are immediately out of a job.
The email, as revealed by Gamasutra, reads,
“The Company is experiencing an economic downturn. To avoid further losses and possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary.
These layoffs are non-voluntary and non-disciplinary.
This is your official notice of lay off, effective today, Thursday, May 24th, 2012.”
The use of “economic downturn” strikes as particularly egregious, perhaps even disingenuous. The company in fact was experiencing an enormous lack of money having accepted a massive loan by relocating to Rhode Island and getting into massive debt with the state.
A press conference taking place as I type had Rhode Island governors explaining that they saw no reason to be confident that the company would go on to become profitable. And Rhode Island have just published a lot of related paperwork here.
A Rhode Island governor has said that Amular would have needed to sell 3 million units to break even.
We wish the very best to all those affected by the lay offs, and hope everyone is quickly able to find work. Twitter is currently alive with job offers via the #38jobs hashtag.
Ah fuck. The amalur board is in mourning. I really did wish to see KOAR 2. I guess I will just have to settle for the replay value of KOAR with both DLC.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
Some people are blaming EA? For those who know more about the gaming industry, why do people have a hard on of hate for EA?
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
Just for interest Crackpot, are you living in Rhode Island?
Even though I liked playing KOAR I agree with you. It was a giant risk giving a loan to Schilling's company. Well it looks like they will have 38 studios intellectual property. I wonder if they sell it to some other game developer, and which one.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
mr friendly guy wrote:Just for interest Crackpot, are you living in Rhode Island?
Even though I liked playing KOAR I agree with you. It was a giant risk giving a loan to Schilling's company. Well it looks like they will have 38 studios intellectual property. I wonder if they sell it to some other game developer, and which one.
I do. Heads have rolled at the state economic development comission, and more will yet. Former Governor Carcieri's name is mud for this and i do hope the leadership of the state legislature go down as well. Bi-partisan clusterfuck.
"This business will get out of control. It will get out of control and we’ll be lucky to live through it.” -Tom Clancy
What gets me is that Curt Schilling has said that "in order to be successful", KoA would have had to have sold 3 million copies. How the fuck do you mis-manage money so bad that you need that many sales to break even? Oh, right, when you sink all your funds into making an MMO before you've even got any product to sell.
I wonder if he would have been so flippant with the funding if it had been his own money on the line.
Mayabird is my girlfriend
Justice League:BotM:MM:SDnet City Watch:Cybertron's Finest "Well then, science is bullshit. "
-revprez, with yet another brilliant rebuttal.
It strikes me as making more sense to make KOAR, build a fan base (and 1.2 million sales can't hurt), make more money with DLC, then build a sequel and then move onto making an MMORPG.
Amalur supposedly has the advantage of combat being nicer than rival products (I don't game much, so gamers feel free to correct me), so it had something going for it. I was semi seriously considering subscribing to the MMORPG (even though I never played them before) purely because I enjoyed playing KOAR so much.
Never apologise for being a geek, because they won't apologise to you for being an arsehole. John Barrowman - 22 June 2014 Perth Supernova.
Countries I have been to - 14.
Australia, Canada, China, Colombia, Denmark, Ecuador, Finland, Germany, Malaysia, Netherlands, Norway, Singapore, Sweden, USA.
Always on the lookout for more nice places to visit.
mr friendly guy wrote:Well it looks like they will have 38 studios intellectual property. I wonder if they sell it to some other game developer, and which one.
Why not? The IP is worthless to the state, they want to recoup losses and someone will certainly try to pick up rights to well-selling game.
Though, I imagine there might be two bad cases for fans, one where state expects to get more money than the IP is worth and holds it until it's worthless, or rival publisher buying it to kill a competitor (or just buying it without clear plans how to use it, which is essentially the same thing).
DAVID KLEPPER and ERIKA NIEDOWSKI | May 25, 2012 06:31 PM EST | AP
PROVIDENCE, R.I. — Gov. Lincoln Chafee on Friday said former Red Sox pitcher Curt Schilling's video gaming company is again in violation of a loan guarantee agreement with Rhode Island after it failed to notify state officials of mass layoffs, and that he'll seek an audit of the company's finances.
Schilling's 38 Studios laid off its entire workforce Thursday – including about 300 employees in Providence and more at a second Maryland location_ and did not notify the state, Chafee said at a news conference.
The company was lured to Rhode Island from Massachusetts in 2010 after the state Economic Development Corporation board agreed to a $75 million loan guarantee, which was supposed to bring hundreds of jobs and millions of dollars in tax revenue.
38 Studios' financial troubles came to light this month when it defaulted on a $1.1 million payment to the EDC that was due May 1. The company later paid.
But now it is in default again, Chafee said. Under federal law, employers who have at least 100 employees and plan to shed at least 50 jobs are required to give a 60-day notice to workers and state unemployment officials.
Chafee said Friday he would seek an audit of how the company used the $50 million it has received in loan funds, all of which is gone, state officials have said. The governor wants "everything documented" because, he predicted, there are going to be "so many lawsuits."
Chafee described himself as "quite pessimistic" that the company could secure the type of outside investment that may be the only way for it to stay afloat.
Schilling has not responded to repeated messages left for comment.
Meanwhile, the EDC was in disarray as questions mounted over whether the state exercised proper oversight of the loan guarantee.
Chafee was seeking the resignation of EDC board members who approved it, but the fate of some of them wasn't clear Friday. EDC Executive Director Keith Stokes, a vigorous backer of the guarantee, and board Vice Chairwoman Helena Foulkes already resigned.
EDC board member George Nee said Chafee asked him to step down and Nee refused.
"He felt it would be better to have a new start," Nee said of Chafee's request. "I disagreed with him. We had a pleasant conversation."
Chafee's office said Thursday that board member Stephen Lane had resigned but he hasn't submitted a resignation letter.
Chafee said he would not reappoint Nee and two other board members – Timothy Babineau and Daniel Sullivan – whose terms have already expired.
Chafee spokeswoman Christine Hunsinger said Friday she couldn't say for sure who was serving on the board. EDC spokeswoman Judy Chong said the same.
EDC board members are appointed by the governor, who acts as board chairman, and are subject to confirmation by the state Senate.
Treasurer Gina Raimondo and others have questioned whether state oversight of the 38 Studios deal was sufficient. Sullivan said he hadn't received any updates on it until recently, after the company's troubles surfaced.
The EDC and 38 Studios signed a monitoring agreement in November 2010 under which IBM would provide 38 Studios with an initial assessment of "Project Copernicus" – the development of the company's second game – and quarterly "milestone verification" reports, according to a copy of the agreement.
The initial assessment was to include a review of project plans, financials and financial management as well as an analysis of risks and recommendations on how to mitigate them. Subsequent reports would essentially be progress checks, which IBM suggested would include a review of the project's financial status and a list of results "relevant to Rhode Island's interests."
The agreement said 38 Studios would provide to the EDC copies of all materials prepared by IBM and invite EDC to attend all discussions between 38 Studios and IBM.
But in August, the EDC and 38 Studios signed a "modification and waiver" to the agreement saying that, instead of being provided with IBM's actual reports, the economic agency would agree to briefings from IBM on the findings. This came at the request of 38 Studios. The modification cited confidential and proprietary information contained in the findings – which, if publicly disclosed, could cause "irreparable and significant harm" to 38 Studios and the "commercial prospects" of Copernicus, the document says.
Still, the agreement also noted that the EDC would be "entitled" to see IBM's assessments if it requested.
Chong, the EDC spokeswoman, said "various staff" there received verbal briefings on IBM's initial assessment and two quarterly reports. She didn't say who received those briefings, whether additional ones were held or whether the EDC ever requested information from the company that it didn't receive.
Chafee said he wasn't aware of the modification.
"I did not know, and I assume the board did not know," he said.
Stokes did not return a message Friday.
___
Associated Press writer Laura Crimaldi contributed to this report.
38 Studios passes second mortgages onto some former employees
By Brian Crecente on May 25, 2012 04:27 pm
Some of the hundreds of 38 Studios employees laid off yesterday were hit with a second round of bad news this week when they were told that homes they thought the company had sold for them hadn't been, and that they may be stuck with a second mortgage, Polygon has learned.
Several sources directly impacted by the mortgage issue confirmed the news today and a 38 Studios official, who asked to not be named, said the company is working to try and get to the bottom of the notifications and find a resolution.
One former employee said they discovered this week that their Massachusetts home, which they had been told was sold last year, actually hadn't been. The bank contacted them this week to ask why they mortgage wasn't being paid.
It is unclear how many of 38 Studio's 288 Rhode Island employees may be impacted, but it will likely only affect some of those who were part of the company's relocation program. The program, we were told, was used to help employees moving from Massachusetts to Rhode Island when the company relocated.
The bank notifications raise the specter of how the financing for the relocations was handled. If the company used state-backed money to finance homes or pay mortgages while the homes were being sold, it could mean that 38 Studios violated the terms of the agreement with the state.
Reached for comment this afternoon, state officials told Polygon they had no independent knowledge of the mortgage issue.
During an afternoon press conference today, Gov. Lincoln Chafee told a gathering of press that because 38 Studios didn't alert the state ahead of time about the layoffs the company is once more in default on the agreement.
Chafee spent much of the conference answering increasingly hostile questions and reminding the gathering that he opposed the deal, which was made under another governor.
He also said that celebrity may have played a factor in the state making the agreement, but that it never impacted his opinion on the deal.
"When I looked at him I saw a business man, not a baseball player," he said.
38 Studios laid off all 379 employees, 288 of them in Rhode Island, yesterday afternoon in a terse email. Sources tell Polygon that the company had not been communicating with employees, or paying them, for nearly a month prior to the mass layoffs.
Schilling's only public response to the financial turmoil that has embroiled both his company and the state of Rhode Island had been a tweet thanking people for sending "prayers and well wishes" to the team and families of 38 Studios.
A similar post on his Facebook account was met with a tide of well wishers including a number of former employees and John Smedley, president of Sony Online Entertainment who wrote, "Curt – the game you are building is amazing. Find a way. I'm sorry you're having a tough time right now."
The studio's financial turmoil came to light earlier this month when it first missed and then later made a $1.125 million payment to the state of Rhode Island.
Founded in 2006 in Massachusetts as Green Monster Games, 38 Studios was lured to Rhode Island in 2010 by a $75-million loan guarantee from the state. At the time state officials argued that the studio would bring hundreds of jobs and millions in tax revenue to the state.
While 38 Studios made its first partial payment, it then missed a $1.125 million loan payment to the Rhode Island Economic Development Corporation on May 1. During a series of meetings with the state, 38 Studios said it couldn't pay its employees and asked for more help from Rhode Island. The studio later delivered a payment to the state, but then said it couldn't cover the check. On May 18, it made good on the payment.
Schilling, and the state, both continue to hunt for private investors for the company.
If 38 Studios remains closed, the state says it has the money to make the first year of payments on the loan from a reserve they set aside from the loan amount. But after that the state would then have to start making the payments to the bank.
The developer was working on a massively multiplayer online game codenamed "Project Copernicus." It released Kingdoms of Amalur: Reckoning through publisher EA in February. The game reportedly sold 1.2 million copies in the first 90 days, according to Schilling, and was positively received by critics. Last month, 38 Studios released a downloadable expansion pack for the game titled "Teeth of Naros."
Gov. Chafee dismissed the possibility of the state taking over the studio during a press conference earlier this week, saying it would be too costly to create and maintain an MMO.
The director of the Economic Development Corporation resigned earlier this month, two other members of the board have asked not to be reappointed, and yet another resigned this week. The state is also discussing asking for the resignation of other board members who supported the decision to back 38 Studios.
A slew of developers from around the country have been Tweeting that they are hiring in hopes of finding the hundreds of displaced employees jobs.
Catch up on the history of the studio and its deal with Rhode Island here.
bilateralrope wrote:
Is there any way this could be legal ?
Laying off everyone with a half hour notice is illegal. Also, he violated the loan guarantee contract every which way he could so there is some major liability there. I forsee a bankrupt and possibly imprisoned Curt Shilling in the future.
"This business will get out of control. It will get out of control and we’ll be lucky to live through it.” -Tom Clancy
Several RI officials have already resigned over this mess, I'm sure they'll be looking for some way to make Schilling take a lot of the blame too.
Mayabird is my girlfriend
Justice League:BotM:MM:SDnet City Watch:Cybertron's Finest "Well then, science is bullshit. "
-revprez, with yet another brilliant rebuttal.
