Schilling’s pathetic Chafee blame game on 38 Studios

Jun 24, 2012

Curt Schilling took to the sports talk airwaves last Thursday to once again blame Governor Lincoln Chafee for the collapse of his 38 Studios video game company.

As usual, the washed up Red Sox pitcher tried to deflect blame from his wrongheaded leadership of the nascent company and shift responsibility to Chafee and R.I. state government.

Schilling chose John Dennis and Gerry Callahan’s popular WEEI radio program `Dennis & Callahan’ to give his first public interview since talking to Mike Stanton and Andy Smith of the Providence Journal over the Memorial Day weekend. Big Schill was in his element, trading small talk with the jock-sniffing hosts and yukking it up to Callahan’s right-wing snark. (Gerry obviously wasn’t an economics major; he seemed to equate tax breaks given to attract industries with Rhode Island’s taxpayers-on-the hook bond deal for 38 Studios).

Schilling asserts that Chafee’s May 14 comment about the state working to keep the video game company “solvent’’ after it had missed a $1.1 million payment to the state scared away investors.

The ProJo coverage of this back-and-forth consisted of the `he said she said’ journalism that has been the hallmark of too much of the 38 Studios coverage in Rhode Island’s largest newspaper.

Luckily, the Boston Globe has weighed in from day one with much smarter and more nuanced reportage. What the Globe piece by Todd Wallack (who has done a fine job on this story) last Friday shows is that Schilling’s company was in deep trouble long before 38 Studios missed the crucial payment and Chafee made his comment.

Wallack portrays a company that couldn’t find investors long before the day of reckoning came. 38 Studios has stopped making payments to major vendors, including Blue Cross and Blue Shield of Rhode Island in March, well before the Chafee comment.

Schilling said on the talk radio interview that, “It all happened so fast. It’s been kind of a surreal 60 days, 75 days.’’

But as the Globe points out, that wasn’t true. 38 Studios had been having problems for years before the end finally came with layoffs of employees and a Chapter 7 bankruptcy filing.

Schilling, who founded the company in 2006, failed for years to raise sufficient capital to compete in the brutally competitive business of video game development. That alone should have raised huge concerns with former Gov. Donald Carcieri, state economic development officials and the political enablers (House Speaker Gordon Fox, D_Providence, and Senate President Teresa Paiva Weed, D-Newport) who allowed Carcieri and Schilling’s pipe dream to win Rhode Island taxpayer financing.

“Meanwhile,’’ as the Globes states, “the launch date for the company’s flagship project, a massive online role playing game code-named Copernicus, kept getting delayed.’’

38 Studios had planned to release the game as early as 2010. Then the date was moved to 2012. Most recently the launch was postponed from September 2012 to June 2013, “meaning it would need even more money to keep competing until the game was completed, ’’ according to the Globe.

The Globe article goes to say that in January, 2012, Schilling was “frantically’’ trying to raise cash, “selling million of dollars in film tax credits 38 Studios hoped to get from the state, but hadn’t received, to a company controlled by Michael Corso, a Rhode Island film tax broker.’’

The Globe piece goes on to detail other creditors who weren’t paid by Schilling, including the moving company that relocated employees from Massachusetts to Rhode Island. 38 Studios has listed more than 1,000 creditors in its bankruptcy filing, from pest control services to a software company in Finland.

It is hard not to feel some sympathy for Curt Schilling. As is the case with any entrepreneur, it appears he put his heart, sweat and money into his dream of running a company. It is sad that he failed, especially for the employees who pulled up stakes to join him and for the Rhode Island taxpayers, who are stuck with as much as $102 million in 38 Studios red ink.

But Schilling should “man up’’ as the sports guys say, look in the mirror and take responsibility for the failure of 38 Studios. Neither Lincoln Chafee nor anybody else in Rhode Island was the least bit at fault for the failure of a venture that was in serious, serious trouble long before our governor blew the whistle. Maybe Schilling thinks all Rhode Islanders are as big a rubes as Thanks Don Carcieri, the EDC and the State House gang that has now given us, in effect, a tax increase in the form of video game debt.

So hello, Curt. What we have here is an under capitalized business that couldn’t deliver product on time, hired too many workers at high wages and couldn’t pay vendors. Sounds like a classic failure of management, no?

Chafee has enough problems to deal with in state with 11 percent unemployment. If you want to blame him for something, go after his economic development record since he took office, not the 38 Studios mess Carcieri left him to clean up.