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Default 38 Studios - Schilling Responds

May 30th, 2012, 02:45
The Providence Journal has Schilling's first public comments about the collapse of 38 Studios, with the celebrity sports star saying he stands to lose $50M of his own money and expressing bitterness at the public commentary from Governor Chafee:
Schilling's controversial partnership with the State of Rhode Island was forged with $75 million in taxpayer-backed bonds two years ago. If 38 Studios fails, Rhode Island taxpayers will be liable to repay more than $100 million. Also, Schilling says, he stands to lose $50 million of the fortune he earned as a professional baseball player and committed to the venture.
Schilling says that state economic-development officials reneged on a deal to approve film tax credits to which 38 Studios was legally entitled, and to allow the company to defer a $1.12-million payment that was due the state on May 1 so that 38 Studios could meet its May 15 payroll.
Schilling also criticized Chafee's "devastating" public remarks about 38 Studios' financial health, which he says scared off private investors.
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May 30th, 2012, 02:45
The devastating comment he is referring to was when Chafee said that they were working to try to keep the company solvent. This scared off a potential investor who was interested in partly financing the Kingdoms of Amalur Sequel because it carried the implication that the company might be at risk of being insolvent in the near future.

For Studio 38, it probably would have been more helpful for Chafee to say "we have great confidence in the the financials of 38 studios" or something else far more PR/Marketting sounding instead of how he did answer that question.

Now I'm sure some will say that the 35 million the publisher was considering using to finance KOA 2 might have covered most of their current expenses for the next 10-12 months. If the MMO was not delayed further, this could have conceivably bought them time to get it out in ideal circumstances. Unfortunately, That's assuming the investor was planning to give them the money up-front and let them spend it on whatever they wanted without expecting development milestones on the project they were actually financing.

The problem is publishers don't do that - they might have fewer and less specific milestones than the REIDC did but they still use them as conditions for receiving chunks of funding and hold licenses and any IP rights they can hostage for developers who don't meet them. I don't think a publisher would be very happy to see the bulk of their investment going to fund the staffing of another project rather than the one they have a direct interest in.

Chafee's careless statement probably hastened this, but if Curt Schilling was banking on a publisher investing in KOA 2 so he could use that money to finish the MMO and then juggle the revenue of that to fund what the publisher had expected their money to go towards in the first place… I kind of suspect the story we would have heard at the end of that would be RI stuck with a bill (slightly smaller) and a publisher suing Curth Schilling for everything he owns.

I do blame the REIDC for not doing anything earlier or being more diligent about what is effectively 75% of the total risk they've generated backing loans. Were they paying attention and also competent there could have been time to work out a way to reduce costs somewhat and perhaps get publisher to invest in a way that wouldn't require selling them the promise of KOA 2 to fund the MMO plus loan repayments and hope the MMO would pay for KOA 2 and the rest of the loan. Of course them being in that situation in the first place was the result of misjudgments and inaccurate expectations on the part of executives and management running 38 studios.
Last edited by jhwisner; May 30th, 2012 at 02:59.
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May 30th, 2012, 03:03
Originally Posted by jhwisner View Post
For Studio 38, it probably would have been more helpful for Chafee to say "we have great confidence in the the financials of 38 studios" or something else far more PR/Marketting sounding instead of how he did answer that question.
I was under an impression that "potential investor" has to be fully informed of investee's financial state? If so, Chafee haven't said anything that said investor wouldn't/ shouldn't have know already. And if governor said what you suggest, and company still went down the plug hole, I bet that he would have been accused of misleading or of outright lying…
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May 30th, 2012, 05:00
Originally Posted by zahratustra View Post
I was under an impression that "potential investor" has to be fully informed of investee's financial state? If so, Chafee haven't said anything that said investor wouldn't/ shouldn't have know already. And if governor said what you suggest, and company still went down the plug hole, I bet that he would have been accused of misleading or of outright lying…
I was mocking the idea that he should have said anything much different than what he did and that anything "helpful" he could have said from Schilling's perspective would probably come across as dishonest at best. And yes, if it was what Chafee said that scared the publisher away than they probably were not fully aware of the company's financial status considering the independent auditor was a bit more direct than just implying the company risked insolvency. So basically, I agree.
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May 30th, 2012, 12:57
38 Studios is down.
It's not the first nor the last developer that will face that fate.
I'm really unsure why is it treated as very important news, I mean… Who cares? Was their RPG so legendary that we should feel something? Oh, yes, we're so evil, two millions of players decided not to buy another endless respawning game and it's OUR fault, it's not the fault of the developer who made such game. All of us should be ashamed for not supporting such a great game, perhaps the greatest ever made, in a few hundred years that game will be praised as a greater masterpiece than Mona Lisa.

To every RPG player it's BIS fate that caused pain, and not some 38 Studios half-dumb project. More developers of such games get closed for good, more happy I'll be. I'm not giving a single cent for respawning games. And it seems I'm not alone opposed to Gamespot and IGN tastes.
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May 30th, 2012, 13:21
Originally Posted by joxer View Post
More developers of such games get closed for good, more happy I'll be.
So any developer that makes any genre of game you don't like should be closed and all it's employees laid off? Everybody has different tastes. I despise jrpg's. But I know a lot of people do like them, and game companies will make them. Same is true of FPS, RTS,RPG, etc..The only 3 letters i give a shit about in any game is if it is F-U-N. HOG's for instance make me want to vomit. But my mother, who is in her late 60's, likes them. She bought a laptop and is now enjoying her games as well as the social sites like facebook. It turned her on to PC gaming. How is that a bad thing? KOA wasn't a horrible game, it just wasn't a real good one. I also think they had way too high of expectations for sales. I think its an absolute shame when ANY game company goes under. I don't care what kind of games they were making. It means people are out of work, and there is one less company making pc games. And I think that blows.

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May 30th, 2012, 13:30
Geez, you really hate the game that much, joxer?

Gamespot and IGN are not exactly connoisseurs of gaming so throwing your opinion in with them isn't necessarily a good thing. It's like citing Fox News as a source

Anyway, I loved the game. And respawning, as you put it, wasn't over the top at all. Two major elements of the game is awesome loot and satisfying combat. Without enemies spawning, those two elements would have been rendered useless.

I'm sad because I enjoyed the game and would have enjoyed a sequel but now I won't. I'm sad because they dared to create a major game IP despite being a pretty new studio by risking the odds but lost. I'm sad for all the people who worked hard on the game and the MMO but are now out of a job.
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May 30th, 2012, 14:45
Originally Posted by joxer View Post
38 Studios is down.
It's not the first nor the last developer that will face that fate.
I'm really unsure why is it treated as very important news, I mean… Who cares? Was their RPG so legendary that we should feel something? Oh, yes, we're so evil, two millions of players decided not to buy another endless respawning game and it's OUR fault, it's not the fault of the developer who made such game. All of us should be ashamed for not supporting such a great game, perhaps the greatest ever made, in a few hundred years that game will be praised as a greater masterpiece than Mona Lisa.

To every RPG player it's BIS fate that caused pain, and not some 38 Studios half-dumb project. More developers of such games get closed for good, more happy I'll be. I'm not giving a single cent for respawning games. And it seems I'm not alone opposed to Gamespot and IGN tastes.
I wholeheartly wish you to lose your job and income because some guys like you get into nerdrage about a product of yours. This will put the situation in perspective for you.

BTW: I hate respawning, too. But this was just 1 feature of about a million.

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May 30th, 2012, 15:52
While I don't mind seeing someone like Schilling take a fall, I do feel sorry for all the common employees that worked for 38 studios. Schilling makes it hard for anybody to like him or take his side. He was like that in his baseball career too.

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May 30th, 2012, 17:02
Originally Posted by Sir_Brennus View Post
I wholeheartly wish you to lose your job and income because some guys like you get into nerdrage about a product of yours. This will put the situation in perspective for you.
Thanks on your wishes. But trust me when I say this - I would never make such fuss all over internet about losing my job. Especially when there are so many different jobs out there I can apply on - but OMG is it even possible - none of those is one of these:
1. designing an endless mobrespawning game
2. trying to sell such thing in 3+ million copies
3. writing a review how a certain endless mobrespawning game is a dawn of new era, the next big thing, so perfect product noone will resist and similar crap

Did I mention BIS? Yea… Well… Instead of weeks of fuss, most of them simply made Obsidian and are back in the business. Why 38 studios can't do the same thing? I'll tell you why. Because they still want to make endless mobrespawning games that can't get 3+ million audience and are now whining on facebook, twitter, blog, etc.

Originally Posted by Icefire View Post
So any developer that makes any genre of game you don't like should be closed and all it's employees laid off?
No. Ensemble Studios is dead for example. Their games ain't RPG and I feel sorry they're closed.
I specifically said what games I mean - I'll gloat whenever an endless mobrespawning developer is shut down. More of those cease to exist, more nonmobrespawning I'll get.
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May 30th, 2012, 17:11
Originally Posted by crpgnut View Post
While I don't mind seeing someone like Schilling take a fall, I do feel sorry for all the common employees that worked for 38 studios. Schilling makes it hard for anybody to like him or take his side. He was like that in his baseball career too.
I've been following this story via some RI sources. I don't know squat about Schilling other than what is being talked about as it relates to this specific news story. Based on what you wrote and what I've seen others write in various forums, Schilling I guess is a sort of 'hard ass' and easy not to like. But I don't know for myself one way or the other.

But it is starting to appear that the entire situation isn't as clear cut as it first seemed. There is a strong appearence that there is foul play on both sides of the fence. And it's starting to appear that there is perhaps more foul play on the RI government side of the fence.

Regardless, some of the comments made by RI officials certainly reveals an amateurish level of negotiation and PR - if not that then incompetence or willful acts to punish Schilling while still injuring themselves. A real drama.

But there is still one really damning thing against Schilling that I am anxious to learn more about. Did he really leave a good number of his employees on the hook with home mortgages when those employees believed their homes were being sold and otherwise not their responsibility anymore? That is one fact I really want to get clarity on because if that's true then perhaps RI and Schilling just deserved each other.

This story is a 'slow bleed' but I do believe all relevant information will slowly be revealed over time. Until then it is a 'wait and see' until such time that the true villians can be determined - whether that's Schilling, RI, or both.

Unfortunatley, either way, a lot of employees through know fault of their own lost their jobs which is a shame.

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May 30th, 2012, 17:24
Originally Posted by joxer View Post
I'm really unsure why is it treated as very important news, I mean… Who cares? Was their RPG so legendary that we should feel something?
It's not that this is an 'important' RPG story inasmuch as it is an interesting 'business' story (well, interesting for those of us who didn't lose jobs anyway).

There is anywhere between 50 and 75m on the line and almost 300 people lost their jobs. Behind the scenes is a famous baseball player and a governer to spice things up. All this in RI, which worked with Schilling's company just a few years back to relocate those employees who just lost their job to that location.

If you are interested in business news, the entire situation is an utter disaster that is hard not to look at (like a car accident). I'm guessing RPGWatch is following this story, eventhough it's not about KOA:R itself, because RPGWatch followed the development of KOA:R for a long time and it just sort of makes sense to follow this turn of events.

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May 30th, 2012, 18:30
I'm curious about how Schilling "stands" to lose 50 Million of his own money. It was my understanding that his personal investment had already been reimbursed to him. His claim smells like a lame sympathy grab to me.
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May 30th, 2012, 18:42
Originally Posted by JDR13 View Post
I'm curious about how Schilling "stands" to lose 50 Million of his own money. It was my understanding that his personal investment had already been reimbursed to him. His claim smells like a lame sympathy grab to me.
Yeah I'm seeing a lot of numbers thrown around. I don't think what has been revealed to the press can be considered 'hard fact' at this point.

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May 30th, 2012, 19:11
Originally Posted by TheMadGamer View Post
But it is starting to appear that the entire situation isn't as clear cut as it first seemed. There is a strong appearence that there is foul play on both sides of the fence. And it's starting to appear that there is perhaps more foul play on the RI government side of the fence.
Well Schilling is suggesting the state is going back on its word about providing film production tax credits, but he only sought those relatively recently and had originally said:

Schilling subsequently reiterated his lack of interest in tax credits in a radio interview in July 2010, the same week the loan guarantee was approved. "Unbeknownst to a lot of people, we’re not looking for tax credits," he told WEEI. "Tax credits are an endgame play. … Tax credits for us are not - they were never, ever something we were after
But over the last several months he applied for the 8 million in film tax credits which he said could be sold to another company for cash (that company could use it to pay its taxes - so he'd sell it at a slightly reduced rate. Most of that was applied for (6.5 million) in march of this year. Obviously free money would sound better to anyone than money in exchange for a stake in your company. Unfortunately for schilling, that may have violated RI law regarding those tax credits:

38 Studios is a limited liability company organized under Delaware law, according to records at the secretary of state's office reviewed by WPRI.com. The company did register its business in Rhode Island in September 2010, but did so as an out-of-state LLC.

Rhode Island's tax credit law explicitly states that productions are only eligible to receive credits if the business in question is "formed under the laws of the state of Rhode Island."
I don't really think this sounds like "foul play" exactly - it rather more like "dumb play." Chafee's public comments probably didn't make Schilling thrilled about negotiating with the state and perhaps some personal dislike between the two made finding a deal that would work for both the state and the company unlikely.

http://www.wpri.com/dpp/news/local_n…on-tax-credits
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May 30th, 2012, 20:17
Originally Posted by jhwisner View Post
I don't really think this sounds like "foul play" exactly - it rather more like "dumb play."
Yes, I agree your term 'dumb play' does fit better, at least at this point with what we think we know.

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May 30th, 2012, 21:44
What's most irritating, here was a guy, Schilling, who espoused rightie values of taking personal responsibility for one's personal finances, and decried anyone who gets help from the government, then turns around and does exactly what he shits on others for, and then fails on top of it, and then cries about the gobernment not helping him enough. I have no sympathy for his hypocritic ass, but I do for his employees.
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May 30th, 2012, 21:59
Originally Posted by Thrasher View Post
What's most irritating, here was a guy, Schilling, who espoused rightie values of taking personal responsibility for one's personal finances, and decried anyone who gets help from the government, then turns around and does exactly what he shits on others for, and then fails on top of it, and then cries about the gobernment not helping him enough. I have no sympathy for his hypocritic ass, but I do for his employees.
I've seen this said a number of times on various forums. But actually, he is fairly predictable as a conservative and capitalist having done exactly what he did.

The loan he received from RI was exactly that… a loan, as in, NOT a hand out. A loan is something you have to pay back. With interest. Such a thing is not equivelent to a hand-out which is something one recieves without any obligation or requirement to pay back. If RI gave Schilling a hand-out, that would make him a hypocrite.

The film tax credits he wanted to take advantage of is an established tax credit offered by RI. If RI negotiated with him to allow this kind of tax credit in order to encourage him to setup shop in RI then again, nothing wrong with that - it was a potential win-win for RI and his company.

There really is nothing hypocritical about what he has done relative to being 'conservative' or 'republican.'

On the flip side, I'd actually put forth an opinion I hold in general that governments need to throttle back their participation in free market investments as they more often than not choose poorly and the taxpayers as always are stuck with the mess.

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May 30th, 2012, 22:18
Uh no, according the rightie's, government should NOT be involved in investing in corporations. Period. That's socialism, God forbid! So yes, he is a hypocritic ass. A big one.
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May 30th, 2012, 23:03
Originally Posted by Thrasher View Post
Uh no, according the rightie's, government should NOT be involved in investing in corporations. Period. That's socialism, God forbid! So yes, he is a hypocritic ass. A big one.
Originally Posted by TheMadGamer View Post
On the flip side, I'd actually put forth an opinion I hold in general that governments need to throttle back their participation in free market investments as they more often than not choose poorly and the taxpayers as always are stuck with the mess.
Too quick to disagree. You clearly didn't read what I wrote. And I still think you're wrong (but saying so with all due respect).

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