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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TechnogeekAlso, it's the upgrade that's available for installation now. You might need to forcibly initiate the Windows Update process before it'll start downloading, though. (If there's a C:\$Windows.~BT folder on your computer, then you're in luck.)07/29/2015 - 8:46am
TechnogeekAdmittedly there's more room to push for an advertiser boycott when you get into opinion content versus pure news, but keep in mind that reviews are opinion content as well.07/29/2015 - 8:46am
TechnogeekMatts: There's a difference between "this person regularly says extremely terrible stuff" and "I don't like the phrasing used in this one specific editorial".07/29/2015 - 8:45am
MattsworknameWait, is that for the upgrade or the clean install only? cause I was gonna do the upgrade07/29/2015 - 8:32am
james_fudgehttps://www.microsoft.com/en-us/software-download/windows1007/29/2015 - 8:30am
PHX Corp@Wilson, I'm still waiting for My upgrade notice aswell07/29/2015 - 7:57am
MattsworknameWilson: how? Im still waiting for my upgrade notice07/29/2015 - 3:44am
Matthew WilsonI updated to a clean instill of windows 10.07/29/2015 - 2:36am
Mattsworknameargue that it's wrong, but then please admit it's wrong on ALL Fronts07/29/2015 - 2:06am
MattsworknameTechnoGeek: It's actually NOT, but it is a method used all across the specturm. See Rush limbaugh, MSNBC, Shawn hannity, etc etc, how many compagns have been brought up to try and shut them down by going after there advertisers. It's fine if you wanna07/29/2015 - 2:05am
Mattsworknamediscussed, while not what I liked and not the methods I wanted to see used, were , in a sense, the effort of thsoe game consuming masses to hold what they felt was supposed to be there press accountable for what many of them felt was Betrayal07/29/2015 - 2:03am
MattsworknameAs we say, the gamers are dead article set of a firestorm among the game consuming populace, who, ideally, were the intended audiance for sites like Kotaku, Polygon, Et all. As such, the turn about on them and the attacking of them, via the metods07/29/2015 - 2:03am
MattsworknameAndrew: Thats kind fo the issue at hand, Accountable is a matter of context. For a media group, it means accountable to its reader. to a goverment, to it's voters and tax payer, to a company, to it's share holders.07/29/2015 - 2:02am
Andrew EisenAnd again, you keep saying "accountable." What exactly does that mean? How is Gamasutra not accounting for the editorial it published?07/28/2015 - 11:47pm
Andrew EisenMatt - I disagree with your 9:12 and 9:16 comment. There are myriad ways to address content you don't like. And they're far easier to execute in the online space.07/28/2015 - 11:47pm
Andrew EisenMatt - Banning in the legal sense? Not that I'm aware but there have certainly been groups of gamers who have worked towards getting content they don't like removed.07/28/2015 - 11:45pm
DanJAlexander's editorial was and continues to be grossly misrepresented by her opponents. And if you don't like a site, you stop reading it - same as not watching a tv show. They get your first click, but not your second.07/28/2015 - 11:40pm
TechnogeekYes, because actively trying to convince advertisers to influence the editorial content of media is a perfectly acceptable thing to do, especially for a movement that's ostensibly about journalistic ethics.07/28/2015 - 11:02pm
Mattsworknameanother07/28/2015 - 9:16pm
Mattsworknameyou HAVE TO click on it. So they get the click revenue weather you like what it says or not. as such, the targeting of advertisers most likely seemed like a good course of action to those who wanted to hold those media groups accountable for one reason07/28/2015 - 9:16pm
 

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