share this news:
Let’s face it, everyone loves it when a celebrity from the sports world or Hollywood unexpectedly succeeds in a new business venture outside of their original claim to fame. So former Red Sox pitcher Curt Schilling probably had a leg up on the competition when the buzz started over the video games company he founded soon after his retirement from baseball.
Schilling astutely leveraged his legendary status in Beantown–where he is a baseball deity thanks to his 2004 heroics–to turbocharge the digital media startup. He located the new firm in the heart of Red Sox Nation in Massachusetts and incorporated his old uniform number in its name: 38 Studios.
But then the crafty righthander threw a wicked curveball at the faithful in Boston: After securing a $75-million loan guarantee from the Rhode Island Economic Development Corp., Schilling uprooted his fledgling company in 2010 and moved it to Providence.
In exchange for the hefty loan support, 38 Studios promised to bring at least 450 jobs and millions in revenue to the Ocean State. When the shop’s first gamer entry (Kingdoms of Amalur: Reckoning) debuted to highly positive reviews in February, it seemed that Schilling and Co. were well on their way to making good on this promise.
Unfortunately, it now looks like 38 Studios has produced a reckoning of a different sort.
The Associated Press reports 38 Studios failed to make a scheduled $1.1-million payment to RIEDC on May 1. This was followed by a closed-door meeting between Schilling, Gov. Lincoln Chafee and RIEDC board members in which Schilling reportedly asked the state for additional financial help to save 38 Studios.
According to AP, Gov. Chafee emerged from the meeting asking “How do we avoid throwing good money after bad?”
Schilling, perhaps having a flashback to a locker room press conference after a poor pitching performance, brushed past reporters with a terse “My priority right now is to get back to my team.”
Rhode Island is in the uncomfortable position of having to decide whether to double down on its investment in Schilling’s apparently shaky business or risk paying the company’s debts.
To his credit, Gov. Chafee criticized the loan guarantee at the time it was offered, saying it was putting taxpayer money at risk to help a company with no track record of success. During his gubernatorial campaign, Chafee called it “one of the biggest risks I’ve ever seen.”
A prospectus that 38 Studios presented to Rhode Island when it pitched the loan guarantee claimed the startup was developing a massively multiplayer online game called Copernicus geared at challenging the industry leader, World of Warcraft. The initial target market for the game was estimated to be $3.2 billion in net revenue in North America and $1.6 billion in Europe.
According to AP, four months before Rhode Island held a bond sale to raise money for 38 Studios, the company took out a revolving line of credit of $2.5 million to support its operations. Two months later, 38 Studios took out a 120-day credit line worth $3 million that also was expected to be paid down with the bond proceeds.
Under legislation passed in 2010, RIEDC was given the authority to back up to $125 million in loans to businesses promising to create permanent, full-time jobs. The loans would come from lending institutions, not the state, but Rhode Island would agree to repay the lender if a company defaulted.
RIEDC reports that 38 Studios has received nearly $50 million so far and has created 250 full-time jobs with an average annual salary of at least $67,500.
We’re not going to second-guess the folks in Rhode Island over their bet that Curt Schilling’s video game gambit would jump-start a new growth sector in the Ocean State. Rhode Island was hit hard by the recession and diversification into the red-hot digital media sector was a bold departure from its traditional industrial base. Business Facilities cheered this move (and showcased 38 Studios) in our March/April cover story.
But as devout believers in baseball kharma, we will state forthrightly that Curt should have known better than to turn his back on Beantown.
Early in the last century, a legendary Boston Red Sox pitcher abruptly relocated to another venue when George Herman Ruth was sold to the New York Yankees. Babe Ruth moved out of Fenway Park, took over right field in the Bronx and the rest, as they say, is history.
The Bosox were consigned to 84 years of misery in baseball’s equivalent of Dante’s Inferno. Every time they came close enough to a championship to taste it, the Curse of the Bambino–far more powerful than all of the Kingdoms of Amalur–snatched defeat from the jaws of victory.
No memory is more painful to the denizens of Fenway Park than an October night in 1986:
As Mookie Wilson’s weak ground ball headed for Bill Buckner’s glove at Shea Stadium, a sign was prematurely lit on the Prudential building in Boston proclaiming the Red Sox World Champions. Buckner, hobbled by injuries and on the field only because the Bosox manager wanted him to be there for the celebration, could not bend down and pick up the ball. It went through his legs, cruelly extinguishing the sign on the skyscraper in Boston and the hopes of Red Sox Nation.
The Curse of the Bambino was not lifted until another legendary Red Sox pitcher ignored a debilitating ankle injury and refused to leave the mound during the 2004 American League Championship Series. Bleeding through his sock, this hero overcame the Curse and willed the Bosox to victory over the archrival Yankees. The bloody sock is enshrined in Cooperstown and there’s a good chance it will be joined there soon by they guy who wore it:
His name is Curt Schilling. His bronze plaque at the Baseball Hall of Fame will feature him wearing a cap with a “B” on it — for Boston.