His video-game company now a bust, the former Boston Red Sox pitcher leaves the state on the hook for more than $100 million
As a Major League Baseball pitcher, Curt Schilling won the World Series with three different teams, including the Boston Red Sox. He's probably most famous for winning Game 6 of the 2004 American League championship series against the Yankees, a game that featured him toughing it out on an injured ankle that soaked his sock with blood. And in an improbable second act, Schilling is also the owner of a virtually bankrupt video-game company that has left Rhode Island more than $100 million in the red — pushing the cash-strapped state into a budget crisis. Here, a guide to Schilling's disastrous dalliance with fantasy video games and government financing:
How did Rhode Island get involved with Schilling's company?
In a bid to attract tech companies to the state, Rhode Island approved $75 million in loan guarantees in 2010 to Schilling's company 38 Studios. But the deal was risky, most notably because 38 Studios specializes in massive-multiplayer online role-playing games (MMORPGs), which, as the name suggests, involves thousands of different players inhabiting a virtual universe. The MMORPG is "an extremely expensive genre with a very mixed track record of financial success," says Ken Sweet at CNN.
Why did the state agree to the deal?
The investment is a head-scratcher. "It is hard to understand why this happened, except that a couple of well-connected people" made some money, and "Curt Schilling is a sports folk hero in the area," says Alex Pareene at Salon. Adding insult to injury, Rhode Island approved the deal even though 38 Studios had never produced a single video game.
What went wrong?
Things seemed to be going well for the company at first: In 2012, 38 Studios released one game — Kingdom of Amalur: Reckoning — that sold a respectable number of units. But its biggest investment, the yet-to-be released Project Copernicus, was a money vacuum that was reportedly burning through $4 million a month. In May, 38 Studios missed a $1 million loan payment, and it defaulted on a government-backed loan. Things spiraled out of control after that: Governor Lincoln Chafee declared that the company might be insolvent, and soon after 38 Studios laid off all of its 400 employees.
What's the total damage?
Rhode Island is on the hook for more than $112 million when you combine the principal of the loans, the interest, and fees, says Sweet. Rhode Island also essentially owns 38 Studios, which, if sold, is expected to fetch a market price of around $20 million — not nearly enough to reimburse taxpayers.
What does Schilling say?
A staunch conservative, Schilling is fending off attacks that he's a crony capitalist who started his company with a government handout. He argues that potential investors panicked when Chafee questioned 38 Studios' solvency, and that the government reneged on certain tax credits. "I've never taken a penny, and I've done nothing but create jobs and create economy," he says. "And so how does that translate into welfare baby? I've tried to do right by people."
And how have critics responded?
They say Schilling's full of it. "Curt Schilling has been many things in his storied career, but never a whiner — until now," says The Boston Herald in an editorial. Schilling has blamed Chafee for disclosing the company's financial troubles, but this is the "real world, Mr. Schilling — where public officials with a responsibility to taxpayers actually have to say what's on their minds." The sad part is that Schilling will be fine, while "some schools will get shut down or some firefighters are laid off... because of this gritty new addition to Rhode Island's budget deficit," says Pareene.
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