Schilling Speaks Out on 38 Studios Disaster

Over the last two weeks, 38 Studios and its subsidiary Big Huge Games have very publically collapsed amid revelations about missed loan repayments and mismanaged business. But through all of that, the company’s co-founder and head, former Red Sox pitcher Curt Schilling, has remained almost completely silent, refraining from speaking to the media for more than a sentence.

But today, the Providence Journal reports that Schilling is pointing the finger at Rhode Island Governor Lincoln Chafee for many of the studio’s recent troubles. According to the Journal, Schilling never asked the government for a “bailout,” and that the state broke its promises to the company by denying it the film tax credits to which 38 Studios was legally entitled, as well as its refusal to allow the company to defer its first payment of $1.12 million so it could make payroll.

In addition, Schilling accuses Governor Chafee of scaring away potential investors, particularly an unnamed publisher that was set to invest $35 million to fund a sequel to Kingdoms of Amalur. Schilling is calling Chafee’s public comments decrying the studio’s financial difficulties “devastating.” The ex-pitcher also said that he stands to lose $50 million he invested of his own money that he’d earned from his time as a pro-ballplayer should 38 Studios go under.

A post on Joystiq fleshes out the developers’ side of things some more, quoting a former Big Huge Games employee who praised Schilling and his efforts to keep the company going. Said the employee, who commented to Joystiq anonymously:

“Curt was committed to us as a community and as people, he wanted the best possible work environment for the team he cared so much for, and as a result none of us wanted to let him down. He had invested so much into us financially and personally, we were not about to betray that trust. We were not going to take the chance of speaking to the press and accidentally ruining any chances with outside investors. Unfortunately, it didn’t matter if the employees spoke and ruined things with the investors as the Governor beat us to it.”

While it’s certainly likely that Governor Chafee’s remarks about the company’s troubles didn’t do it any favors at the negotiating table, it might be somewhat unfair to put the blame on his shoulders. A commenter on the Providence Journal story sums it up succinctly, asking an important rhetorical question:

“So, in essence, what Schilling is saying is that we, the taxpayers, have no need to know the financial health of his company for which we co-signed on a $102,000,000 loan guarantee? That this information on the financial health of his company should have been buried?”

When dealing with public money, it’s impossible to avoid the possibility and realities of public scrutiny. It might be easy to say that the way the Rhode Island Government dealt with the crisis was more in the public spotlight than it needed to be. But on the other hand, it’s possible that the government officials wanted to ensure that financial information relevant to the public actually made it out to the public.

By not treating the situation with seriousness and openness, they could have easily been painted as complicit in a business deal gone south, as well as trying to cover it up behind closed doors. Going public may not have done Schilling and his company any favors, but the officials’ first priority has to be to the taxpayers. As time goes on, I’m sure we’ll learn more about how things went wrong in this situation—and hopefully 38 Studios and Big Huge Games will find a way to come back from this huge setback and give their employees their jobs back.

According to another post on the Providence Journal, Governor Chafee has scheduled a press conference for 4 p.m., EST, today. We’ll report more if anything comes of that conference.

Any tips or info on this story? Drop us a line at news@machinima.com.

Via Providence Journal and Joystiq

Previous Coverage

• Reports: Amalur Developer 38 Studios Struggling to Stay Afloat
• 38 Studios Missed First Loan Repayment
• Schilling’s 38 STudios Bounces $1.125 Million Check, Can’t Make Payroll
• 38 Studios Makes good on First Payment for $1.125 Million
• 38 Studios Lays Off Employees, Says Rhode Island Governor
• 38 Studios Execs Leave, Employees Unpaid Since May 1
• Screens from Project Copernicus Appear Online
• 38 Studios Lays Off Entire Staff
• Fired 38 Studios Employees Hit with Second Mortgages on Unsold Boston Houses
• Rhode Island Finds 38 Studios in Violation of Labor Laws for Sudden Layoffs
• Author R.A. Salvatore Weighs in on 38 Studios Fiasco
• Amalur 2 was in Pre-Production, Shopped Around to Other Publishers