Rhode Island Begins to Swing Against 38 Studios

[Andy Chalk]

Rhode Island Begins to Swing Against 38 Studios

Rhode Island's $75 million loan guarantee to 38 Studios [http://www.38studios.com/] is starting to look shaky thanks to state general treasurer and gubernatorial candidate Frank Caprio, who expressed some support for the deal in past weeks but now says it's a bad idea for taxpayers.

75 million bucks is a lot of money, even for a U.S. state and especially when that state is tiny Rhode Island. So eyebrows were raised when 38 Studios, founded by former Boston Red Sox hero Curt Schilling, announced that it was moving to the ocean state [http://www.escapistmagazine.com/news/view/102420-38-Studios-Takes-the-Road-and-the-Money-to-Rhode-Island] in pursuit of the hefty loan guarantee. The company promised to bring 450 new jobs to the state by the end of 2012 and Rhode Island Governor Rick Carcieri said the studio's presence would make the state "a real player in the digital-media area."

Others were quick to point out [http://www.escapistmagazine.com/news/view/102696-Rhode-Island-Politicians-Unhappy-With-38-Studios-Deal], however, that 38 Studios hasn't actually done anything yet and that $75 million, well over half of the entire budget allocation to support high-tech and knowledge-based businesses in the state, was a lot of green to throw at a single, unproven company. Caprio, the state general treasurer and Democratic candidate in the upcoming election for governor, didn't denounce the deal outright but did call for changes, including a guarantee that "indirect jobs" created by the studio be located in Rhode Island, that the state take equity in the company and that 38 Studios be made liable for penalties if it starts killing jobs "too soon."

But now he's changed gears and is attempting to block the deal entirely, at least until after the election. Caprio has joined other candidates in condemning the loan guarantees as being too risky for taxpayers and said he has approached credit rating agencies Moody's and Standard & Poor, asking them not to review the contract until the election is over.

"I am not going to stand by and watch us gamble taxpayer dollars on a bad deal when there are thousands of small businesses in need of more access to capital," Caprio said in a press release [http://www.frankcaprio.com/news?id=0028]. "Our state's leaders and EDC are unwilling to stop this deal or restructure it. That's why I've gone directly to the potential investors to stop this deal and to protect our taxpayers."

Shockingly, not all of Caprio's fellow candidates see his actions as entirely for the benefit of Rhode Island's citizens. One Republican described it as "grandstanding," while the Moderate party candidate said it was a "nasty political stunt." Independent candidate Lincoln Chafee supported the move, however, telling Turn to 10 News [http://www2.turnto10.com/news/2010/sep/01/fellow-candidates-critical-caprio-position-schilli-ar-218496/], "The main thing is to stop the deal ... so it's great to have General Treasurer Caprio now join me."

Source: GamePolitics [http://www.boston.com/business/technology/articles/2010/09/01/caprio_aims_to_block_38_studios_deal/]


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[Jared]

Dosnt surprise me at all - I can see some nasty pitfalls ahead for the studio, that much is for sure

 

[crotalidian]

This smacks of publicity stunt he delays it to get elected then hell let it pass because he wants it to once hes got the seat.

In all honesty I'm not sure what to think here. a state investing heavily in a videogame company sounds great but they havent released a game yet and if Rift is a flop it could cause all sorts of issues.

i think giving them some investment with plenty of (reasonable) contraints is the best option with the promise of further funding and less restraints when they prove a viable company and develop a decent game

 

[Kwatsu]

...he has approached credit rating agencies Moody's and Standard & Poor

That's actually what they're called?

Good grief.

 

[Andy Chalk]

This smacks of publicity stunt he delays it to get elected then hell let it pass because he wants it to once hes got the seat.

This strikes me as not entirely beyond the realm of possibility.

Giving a $75 million loan guarantee to EA, Activision, Ubisoft, or even lesser players (relatively speaking) like Epic or Bethesda is one thing. But to a startup company that's never produced a game and that's banking heavily on the famously-fickle MMOG genre? Kinda crazy.

 

[Tom Phoenix]

Am I the only who has little compassion for the Rhode Island state and thinks this was a jackass move on their part?

Yes, this deal was risky and shouldn't have been decided upon without considerable thought. But if I was a member of 38 Studios, I would be outright insulted that they would make such an offer and, once we agreed to move to their state, have them say: "Oh, remember that loan we promised you? Yeah, that might not happen." One could be forgiven for thinking that this was an attempt at a bait-and-switch scheme.

I understand that 75 million $ is a lot of money and it certainly shouldn't be handled lightly, but all of this should have been taken care of before they made such an offer. All these political shenanigans only hurt a company, especially a startup one that is forced to deal with all this instead of focusing on, you know, actually developing titles that would bring it's name out to the world.

To be fair, though, 38 Studios isn't exactly a typical startup company. Whereas most studios start off with people that are completely unknown to the general public, this studio in particular has gathered some of the biggest names in the gaming/entertainment industry. In light of this, I can definitely see why Rhode Island would want them to move over to their state. While name recognistion is hardly a guaruanteed recipe for success, it certainly does help.

 

[Andy Chalk]

I'm inclined to disagree. By "big names" I assume you're talking about guys like RA Salvatore and Todd MacFarlane? They're impressive in their chosen fields, I suppose (although MacFarlane never turned my crank) but that doesn't mean dick when it comes to making videogames. Furthermore, Schilling himself is a former professional baseball player who loves to play games, which gives him about as much cred in the industry as you or I. In his defense, he obviously has some impressive business acumen, which puts him way ahead of me (you can speak for yourself in that regard) but in terms of actually developing games, I don't see where he or anyone else involved in this venture (except perhaps for the guys at Big Huge) brings much to the table.

 

[Sephiwind]

I kind of have to agree with them wanting to back out of the deal. giving 75 million in tax money to a company that hasn't proven them selves is rather risky venture. On the other hand in they all ready signed a contract with them and are just trying to back out of it is also rather shady.

 

[Deofuta]

Nooooooo!

I was so excited my little state was going to support my field of choice, and now this!?!

I was so hopeful one of those 450 jobs would be mine.

*sob*