5:29am

Fri June 1, 2012
Business

Shilling Blames Rhode Island For Company's Downward Spiral

Originally published on Fri June 1, 2012 12:01 pm

Transcript

DAVID GREENE, HOST:

Let's spend some time talking about the big money world of video games. In a moment, what may have been the biggest legal battle ever in the game industry. But first to former Boston Red Sox pitcher Curt Shilling. He is blaming the governor of Rhode Island for the meltdown of his video game company, 38 Studios. The company's failures have seen almost 400 workers lose their jobs and has Rhode Island taxpayers on the hook for close to $100 million. Ian Donnis of Rhode Island Public Radio has the story.

IAN DONNIS, BYLINE: Curt Shilling always seems to have an opinion about anything and everything. But he's only given one interview since trouble developed at the video game company he moved from Massachusetts to Rhode Island in 2011. Shilling told the Providence Journal he places the blame for problems at 38 Studios squarely on Governor Lincoln Chafee. Some of the employees at Shilling's video game company feel the same way.

IRINA MANDEL: We moved to Rhode Island in order to help bolster the Rhode Island economy.

DONNIS: Standing outside 38 Studios' headquarters in Providence, laid off game designer Irina Mandel holds her baby and pins the company's woes on Governor Chafee.

MANDEL: He stonewalled us from being able to continue our business over wanting to gain a few points of approval, and it's really disappointing to see that we all suffered for this argument between he and Curt Shilling.

DONNIS: Shilling says Chafee scared away investors by talking about 38 Studios' problems and blocked critical tax credits. Chafee says the idea that he sabotaged 38 Studios is ridiculous. He says bailing out a company with no clear path to profitability would be throwing good money after bad.

GOVERNOR LINCOLN CHAFEE: It's my job to protect the taxpayer dollars we have a huge investment in.

DONNIS: As a candidate in 2010, Chafee opposed the $75 million state loan guarantee that brought 38 Studios to Rhode Island. He says video games were too risky an investment for public dollars. The 38 Studios' first game, released back in February, did moderately well.

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DONNIS: A dead character brought back to life seeks his destiny in "Kingdoms of Amalur: Reckoning," the video game that Shilling and his creative team at 38 Studios were banking on to make their company a player in the video game industry. The next step for 38 Studios was completing a massive multiplayer online game. But that game may never hit the market. That's because the company ran out of cash and cut its entire workforce in Providence and Maryland. Chafee says everything seemed fine at 38 Studios until mid-April. That's when the company privately warned state officials about money problems and then defaulted on a $1 million payment May 1. Chafee says this cash crunch developed quickly.

CHAFEE: I do believe that there are companies that do fail overnight, and that's what does happen.

DONNIS: And this is a company trying to make it in the entertainment industry.

CHAFEE: And much like a movie or a book or a Broadway show, you know soon, at the release date, how you're going to do.

DONNIS: Video game experts say 38 Studios had top-notch creative talent but lacked the piles of cash to meet its ambitious goals in a high-risk, high-reward industry. Shilling says he put more than $30 million of his own money into 38 Studios. Analyst Michael Pachter follows the video game industry, but he says Shilling was unable to attract private investors, despite his celebrity as a World Series hero with the Boston Red Sox.

MICHAEL PACHTER: This was not a scam. I think he really did lose a lot of his own money. But he'd never made a game before. That's a hard thing to pull off.

DONNIS: Unless the company can make a comeback, Rhode Island taxpayers will be on the hook for close to $100 million. For NPR News, I'm Ian Donnis in Providence, Rhode Island. Transcript provided by NPR, Copyright National Public Radio.

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