After winning three World Series with the Arizona Diamondbacks and Boston Red Sox, Curt Schilling retired with a reputation as gutsy and competitive with an eclectic blend of mostly right-wing political views. He supported George W. Bush and John McCain for president and talks about Ann Coulter’s intelligence, but he also called Barack Obama a “person of unparalleled character” and supports stricter gun control. Tort reform, go figure, appears to be a big issue for him.
But perhaps it’s easier to understand his view of frivolous lawsuits when you read about the deal he got from Rhode Island. After retiring from baseball and briefly flirting with a Senate run, partially derailed by his being registered as an independent, Schilling decided to take his outsized ego into the video-game business. He called his entry Green Monster Games LLC after the left-field wall in Fenway Park, and later renamed it to 38 Studios LLC to honor his own jersey number. His position was founder, chairman, and executive visionary. The company’s goal was to build massively multi-player online games, or MMOs. He intended to compete at the World-of-Warcraft level and promised $1 million bonuses to employees who lasted until the company was worth $1 billion.
The video-game biz seem like a natural fit for a guy like Curt. After all, it “requires superb timing, superb management, superb talent, and a good dose of luck”, as Barry Gilbert, vice president of Strategy Analytics, a consulting firm that advised Rhode Island during its negotiations with 38 Studios, put it. Apparently Schilling has that dose of luck, if nothing else, because he managed to negotiate a $75 million guaranteed loan from Rhode Island, which his company is finding it difficult to repay.
After missing a $1.1 million payment May 1 and a personal plea from Schilling for more public assistance this week, 38 Studios has said it does not not have enough money to pay its employees. On Wednesday, the state economic development official who oversaw the loan guarantees resigned abruptly. In a bizarre twist, at one point Thursday, company representatives hand-delivered a check to the Rhode Island Economic Development Corporation, apparently to cover the late $1.1 million payment, but then later said the company had insufficient funds to cover it.
If nothing else Schilling thinks big.
Schilling had originally hoped to launch the game’s first product in 2010. But he immediately hit trouble raising money. He shocked venture capitalists with an audacious pitch for $48 million — far more than gaming companies typically receive in an initial round of funding. In addition, Schilling was reportedly reluctant to give up much stock in exchange for funding. Flybridge Capital Partners and several other Boston area firms passed on 38 Studios.
“More than one VC who has met Schilling has come away with the impression that an investment would require quite a bit of ‘babysitting,’” noted a trade publication, Private Equity Week, at the time.
Schilling estimated he might need more than $100 million to complete the multiplayer game, code-named Copernicus.
Enter Rhode Island, whose Democratic legislature passed a jobs promotion program involving $125 million in loan guarantees, most of which went to Curt’s company as incentive to move from Massachusetts.
“I had heard rumors that both the governor and House leadership were desperate to cut a deal with Schilling,” [Republican state Representative Robert Watson, former Rhode Island House minority leader] said. “Nobody was admitting to anything at the time. Frankly, Keith Stokes [director of the Rhode Island Economic Development Corp.] and Governor Carcieri’s office were full of obfuscation, camouflage, and possibly outright lies.” Watson said he opposed the program as “a scandal waiting to happen.”
It looks like Curt Schilling has managed to use this company to bilk Rhode Island of millions of dollars, and now he’s asking the government he’s against to give him a handout when he’s already rich and carping about small government.
“We got hoodwinked; we got played,” Watson said. “How many millions of dollars does Curt Schilling have? He can’t write a check? It’s Rhode Island that is supposed to provide the money? I think not.”
Stokes, who resigned late Wednesday, had little to say about the unraveling deal with Schilling, insisting the economic development agency’s negotiations with the company remain confidential. He would not directly address whether the agency gave proper oversight to the state’s investment in 38 Studios.
“I really can’t comment on the nature of the transaction,” he said. “I can give you my favorite William Faulkner quote, which is: ‘All of us failed to match our dreams of perfection.’”
If that’s your best defense, I’d retain an attorney.