Curt Schilling Comments on 38 Studios' Financial Crisis
-
Category: News ArchiveHits: 2806
Schilling also criticized Chafee's (devastating) public remarks about 38 Studios' financial health, which he says scared off private investors.
Within 72 hours of Chafee's May 14 statement that the state was trying to keep 38 Studios (solvent,) Schilling says, a video-game publisher pulled out of a $35-million deal to finance a sequel to (Kingdoms of Amalur: Reckoning,) the fantasy game that 38 Studios released in February.
Chafee said Monday night that he was trying to strike a balance between providing information to the taxpayers and not jeopardizing 38 Studios. As a candidate in 2010, Chafee opposed the state's deal with 38 Studios but said he would be the company's biggest cheerleader once it was in place when he took office in 2011.
On Thursday, 38 Studios was forced to lay off its 286 workers in downtown Providence and 100 in Maryland. (The governor is not operating in the best interest of the company by any stretch, or the taxpayers, or the state,) says Schilling, who invited two Journal reporters and a photographer into the usually off-limits offices at One Empire Plaza, in downtown Providence. (We're trying to save this company and we're working 24/7. The public commentary has been as big a piece of what's happening to us as anything out there.)
...
(To be clear, I've never taken a penny out of this company,) says Schilling. (If this company fails, I will be financially devastated, and so will other people.)
Schilling says that talks continue with potential investors, who might be willing to step in if the state agrees to yield its first position on 38 Studios' collateral to a private investor.
Is 38 Studios finished?
(I don't know,) says Schilling. (I pray that it's not. We're doing everything we can do to make that not be the case.)
...
Meanwhile, Schilling says, the EDC's Stokes and Gilden had agreed to a deal in which 38 Studios would pay the $1.12-million fee and then EDC would facilitate the release of the tax credits, by certifying that 38 Studios was no longer in default.
The night before it was to go through, company director Thomas Zaccagnino says, he learned that the embattled Stokes, who was drawing heavy criticism for the 38 Studios deal, had resigned. Since Stokes had been a point person in talks with 38 Studios, a worried Zaccagnino texted Gilden, (Please tell me that this won't affect our agreement.)
Responded Gilden: (it will not.)
But the next day, when 38 Studios tried to pay the $1.12 million with money from a tax-credit investor, executives say they found themselves in an embarrassing scene in which Chafee announced that 38 Studios had sent a bad check with insufficient funds.
Richard O. Wester, 38 Studio's chief financial officer, says he went to the EDC's offices at 5 p.m. that day with a check. Meanwhile, 38 Studios' controller was back at the office, waiting for the funds to be wired from the buyer of the tax credits into 38 Studios' account. When that happened, Wester would receive the green light to give the EDC the check.
But the tax-credit buyer, whom 38 Studios declined to identify, backed out because the EDC lawyer Gilden would not provide a state guarantee to the buyer. When Wester learned that, he says, he never handed over the check.
Fifteen minutes later, he says, he saw a news story on The Providence Journal's website, quoting Chafee's spokeswoman that the company had given the EDC a bad check.
Until today Curt Schilling, founder and chairman of 38 Studios, had been tight-lipped on the financial woes of his company, which ended up with all the staff laid off and Big Huge Game shut down.
Thanks NeoGAF.
Update: Governor Chafee has responded to Schilling's accusations, Polygon reports:
"I just don't think that's fair," Chafee said to reporters during a press briefing. "Once the facts come out, that's just not going to be proven to be the case.
"I understand that being involved in this very risky industry, that when things aren't going well, there's going to be blame. But this isn't accurate, to be blaming the state in this case. I had a job to do to protect those film tax credits that's millions more taxpayer dollars. I had a job to protect every penny."
Chafee told reporters that state officials are still in contact with Schilling to attempt to find 38 Studios' salvation.
"As I say, hope springs eternal," Chafee said. "But I won't misrepresent to Rhode Islanders how dire this situation is."
