Columnist: 38 Studios Loan a “High Stakes Gamble”

September 27, 2010 -

“What Government run/funded program in this country’s history has ever been run with an ounce of financial responsibility, prudence, or with the peoples (sic) best interest at the forefront? None, that’s which one.”

Those words were used by ex-Major League Baseball pitcher and current 38 Studios head Curt Schilling earlier this year, and are now being used against him in a searing indictment of the loan agreement between Schilling’s studio and the state of Rhode Island.

Rhode Island’s Economic Development Corporation (EDC) lured 38 Studios to the Ocean State from Massachusetts with the promise of a $75 million loan, which was later paired to around $51 million. In a story entitled Curt Schilling’s Rhode Island Hoodwink, columnist Diane Grassi rips the entire deal.

Noting that Rhode Island’s unemployment rate is almost 12 percent, 4th highest in the U.S., Grassi writes that the original EDC program was to have a total budget of $50 million. When Schilling started to make noise about moving and asked Massachusetts for assistance or a loan to keep 38 Studios in Massachusetts, he also approached Rhode Island with a similar request.

Grassi writes:

Rhode Island, unlike its neighbor, Mass., apparently bought it hook line and sinker, because the program's original authorization was increased from $50 million to $125 million, with 60% of it specifically earmarked for Curt Schilling. Quite a feat for a non-resident with no prior allegiance to the state of Rhode Island, nor a commitment to personally move his home there to date, just his company.

If 38 Studios’ business did go south or it failed to live up to its end of the loan agreement, Grassi wonders how the company would be able to repay the loan:

… with intellectual property start-ups, unlike traditional manufacturing, where hard assets are used as collateral, there is little to liquidate with an IP venture. Its soft assets would include intellectual property, licenses, publishing contracts and software, but could be worth very little in the end.

She also estimated that 38 Studios would need to sell 1.75 million copies of its role-playing game Kingdoms of Amalur: Reckoning in order to break even, though “best estimates” predict that the title would sell in the area of 1 million.

In answer to Schilling’s quote that led off this story, Grazzi wrote:

For now going to one of the most cash-strapped states, not to mention the smallest state, with hand outstretched in search of government subsidized corporate welfare is apparently just fine.


Comments

Re: Columnist: 38 Studios Loan a “High Stakes Gamble”

While I do agree with his statement, one has to admit he stuck his foot in it.   Guess it really doesnt pay (pun maybe) to irk off the people controlling the money . 

 
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Andrew EisenComic on EA and its subsidiaries: http://cheezburger.com/8456978176/funny-web-comics-rip-maxis Might be old. Don't know who drew it. Still cute.03/05/2015 - 3:10pm
WonderkarpI'm actually quite excited for rockband 4. cause I feel like theyve had enough time to learn from mistakes and make a better game with better accessories03/05/2015 - 2:22pm
Andrew EisenAnd, for those who want more detail on Rock Band 4, here's an interview with the dev: http://www.hardcoregamer.com/2015/03/05/harmonix-talks-rock-band-4-wii-u-version-missing-keytar-and-upcoming-songs/137579/03/05/2015 - 2:08pm
Wonderkarphttp://techraptor.net/content/rock-band-4-announced Rock Band 4 is coming.03/05/2015 - 12:29pm
Andrew EisenMechaTama - Again, my apologies for being unclear. The last sentence really should have started "For example, in the below link," similar to how I worded the request the last time I made it.03/05/2015 - 11:57am
Papa MidnightBecause, you know, that's worked out so well over the past 10 years that they've said the same exact thing: https://i.imgur.com/RFrFNoZ.jpg03/05/2015 - 9:25am
Papa MidnightAh, it's a new year. You know what that means: time for Microsoft to renew it's promise on PC Gaming! http://www.businessinsider.com/windows-10-games-2015-303/05/2015 - 9:24am
MechaTama31Not to belabor the point, but you did say "folks" and "any links", which doesn't sound to me like you were referring only to one particular link... </pedant> ;)03/05/2015 - 8:33am
MechaCrashIt can be made extraneous, depending on how you format the URL. For example: http://youtu.be/dQw4w9WgXcQ03/05/2015 - 6:28am
Andrew EisenMechaTama - I was referring specifically to the link below my post. I should have been more clear. My bad.03/05/2015 - 2:42am
james_fudgefair point, let's say "excluding YouTube videos"03/05/2015 - 2:25am
MechaTama31The stuff after the ? is not *always* extraneous.03/04/2015 - 11:57pm
MechaTama31AE: But that would make your link https://www.youtube.com/watch , which wouldn't work so well... ;)03/04/2015 - 11:56pm
E. Zachary KnightFor those curious, that timeline came from Destructoid: http://www.destructoid.com/tomm-hulett-s-unified-mario-timeline-theory-288472.phtml03/04/2015 - 8:11pm
WymorenceJeez, who'd have thought Yoshi doing a good deed was the reason for everything in Mushroom Kingdom being so screwed up...?03/04/2015 - 7:49pm
prh99The most popular games on Steam for 2014 http://bit.ly/1zLE0r403/04/2015 - 7:47pm
Papa MidnightWow, EZK. Oh my goodness, that timeline is huge.03/04/2015 - 6:59pm
E. Zachary KnightIt's the Super Mario timeline. https://dl.dropboxusercontent.com/u/386496/smbTimeline_huge.png03/04/2015 - 6:49pm
prh99There are the various URL shortening services.03/04/2015 - 6:45pm
WymorenceIronic that they're releasing a game about cops and robbers in essence while they don the "extortionist" mask...03/04/2015 - 6:38pm
 

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