38 Studios - Rhode Island Settlement

After almost three years of legal problems the battle of Rhode Island vs 38 Studios might finally be over. Gamasutra has the news for anyone is still interested.

Rhode Island announces first settlement in 38 Studios case

The Rhode Island government has announced a proposed settlement in the 38 Studios case, which should net the state around $4.4 million dollars.

The state has reached an agreement with defendants Antonio Afonso, Jr. and Moses Afonso Ryan, a law firm in which he is a partner, and which is a bond holder in the loan the state's development agency — now called RICC — extended to 38 Studios to move to the state to develop its MMO Copernicus. The payment would be made by the law firm's insurance company. The $4.4 million sum represents $5 million in insurance, less the cost of Afonso's defense.

The state took possession of the company and its assets, including the uncompleted Copernicus in 2012, but failed to sell the franchise or the development assets off late last year at auction.

As reported by Rhode Island TV station WPRI, the RICC board of directors has voted to approve the settlement agreement. As is customary in a settlement, Afonso and his firm avoid any admission of guilt by settling; for its part, the state avoids the possibility that the funds will be unavailable by the time a trial could be concluded, WPRI reports.

Though the agreement to settle has been approved by both sides, the court still has to approve the deal before it can move forward.

More information.

I used to follow this story closely but stopped doing so over a year ago. I could be wrong, but I thought that, according to RI, they were in the hole by 70m. So I'm confused as to why a nearly 5m settlement would net the state anything. But I was born confused so it's probably just me…

$5M > $0

Some times you have to take what you can get.

Originally Posted by blatantninja
$5M > $0

Some times you have to take what you can get.

I get that. But that's not what I'm asking. The article phrases it this way:

The Rhode Island government has announced a proposed settlement in the 38 Studios case, which should net the state around $4.4 million dollars.

The way that reads, it's as if the settlement were 74.4m… which would then net the state 4.4m after paying back the loan of 70m. It's just unclear to me and if anyone has more info I'd be interested to hear it.

All that money for a seriously crappy game. a game that made Dragon Age 2 seem not quite so bad. Almost. But not really. Ok, they both succckkkkked.

Monorail! I mean MMO!

https://www.youtube.com/watch?v=sZBP…=RDsZBPoRwog00

What gets me about all this is what does a town get out of it, exactly? The people they hire are mostly not even from USA let alone local. They don't pay any taxes because of local tax deals. All they do is provide the town with some extra smog.

If only I could get 10% of that I could make an awesome game. Even 1% would be more than enough to at least complete what I am doing in style.

So I wonder how much money lawyers and legal fees were for this entire fiasco. I'll bet the sharks were the winners.

Originally Posted by TheMadGamer
I get that. But that's not what I'm asking. The article phrases it this way:



The way that reads, it's as if the settlement were 74.4m… which would then net the state 4.4m after paying back the loan of 70m. It's just unclear to me and if anyone has more info I'd be interested to hear it.

I see what your saying. someone seems to have a different definition of what "net" means.

The $4.4 million sum represents $5 million in insurance, less the cost of Afonso's defense.

--

Originally Posted by Thrasher
So I wonder how much money lawyers and legal fees were for this entire fiasco. I'll bet the sharks were the winners.

I agree but there was also quite a bit of political capital gained out of this "scandal" and someone lost their entire career fortune on a vanity project.

Originally Posted by ManWhoJaped
What gets me about all this is what does a town get out of it, exactly?

What is this crazy question asking what the ordinary tax payer gets out of government deals? The short answer is they pay the bills and cover losses. Now shut up and pay your taxes!

They already own the studio. I think this lawsuit is actually against the lawfirm that approached them to provide the loan in the first place. And it's not much of a real settlement as it only dings the amount they are insured for. So basically they are being punished for allegedly conning the city.

I don't think the studio or even them should be held responsible, though. These kind of loans should simply not be legal. Corporate welfare is an abomination.

Originally Posted by TheMadGamer
What is this crazy question asking what the ordinary tax payer gets out of government deals? The short answer is they pay the bills and cover losses. Now shut up and pay your taxes!

You can say that again.

Originally Posted by ManWhoJaped
Corporate welfare is an abomination.

LOL…please. Corporate welfare? So the government investing in a business that not only brings a bunch of jobs to the area, but has the potential for enormous growth overall for their state and economy, and that's comparable to welfare?

I think more of these types of loans should be made. It's a shame how this one turned out, and I fear that Rhode Island especially will be too afraid to ever do this again, but investing in upstart businesses that have great potential should not be frowned upon or considered welfare.

Hell, 38 Studios had some major players developing that game that should warrant trust. Todd McFarlane, R.A. Salvatore, Ken Rolston, plus a big upfront investment by a baseball legend Curt Schilling. The state had every right to invest in them.

It's a shame how it turned out, but that's a risk you take in business.

Originally Posted by Fluent
LOL…please. Corporate welfare? So the government investing in a business that not only brings a bunch of jobs to the area, but has the potential for enormous growth overall for their state and economy, and that's comparable to welfare?

I think more of these types of loans should be made. It's a shame how this one turned out, and I fear that Rhode Island especially will be too afraid to ever do this again, but investing in upstart businesses that have great potential should not be frowned upon or considered welfare.

Hell, 38 Studios had some major players developing that game that should warrant trust. Todd McFarlane, R.A. Salvatore, Ken Rolston, plus a big upfront investment by a baseball legend Curt Schilling. The state had every right to invest in them.

It's a shame how it turned out, but that's a risk you take in business.

It's not the money of 'the state' but of individual taxpayers. The government is not 'in business' either, and the reason why is that there is lots of risk and they are not competent in all subjects (if any). Since the lawsuit went through obviously there was some shady happenings going on with this deal.

Like I said they don't hire locals much in these deals, except in low-paying jobs. Many employees probably aren't from the same country. They also don't collect any taxes because of the generous deals they make. So I have to conclude there's no benefit to be had by this, for the township itself.

Of course a few people obviously got rich off of this, it benefits them a great deal. But this amounts to little more than kickbacks and payoffs. Even if it had broken even the company is little more than a parasite to the community.

Originally Posted by Fluent
LOL…please. Corporate welfare? So the government investing in a business that not only brings a bunch of jobs to the area, but has the potential for enormous growth overall for their state and economy, and that's comparable to welfare?

I think more of these types of loans should be made. It's a shame how this one turned out, and I fear that Rhode Island especially will be too afraid to ever do this again, but investing in upstart businesses that have great potential should not be frowned upon or considered welfare.

Hell, 38 Studios had some major players developing that game that should warrant trust. Todd McFarlane, R.A. Salvatore, Ken Rolston, plus a big upfront investment by a baseball legend Curt Schilling. The state had every right to invest in them.

It's a shame how it turned out, but that's a risk you take in business.

Sorry Fluent but no,no and more no.

I'm all for governments helping out small businesses. ( I own one)

Help real many SMALL businesses though, not 1 very high risk business. This was like playing roulette, put all you cash on one number and cross your fingers.

They could have giving 1500 small businesses ( not in the video game industry) 50,000 apiece and helped many more people and diversified their investment instead of putting all their eggs in one basket.

Obviously if the game would have been a success and they made their money we'd all be singing a different tune but even if it paid off it was a big time risk ( that they took with tax payer dollars) not a sound investment.

Hindsight is 20/20. If 38 Studios developed into the vision Curt Schilling had for them, we'd be praising Rhode Island for taking the initiative and having the vision to give them the loan.

If a bank would not make the loan, the government should be even more conservative.

Originally Posted by sakichop
Help real many SMALL businesses though, not 1 very high risk business. This was like playing roulette, put all you cash on one number and cross your fingers.

They could have giving 1500 small businesses ( not in the video game industry) 50,000 apiece and helped many more people and diversified their investment instead of putting all their eggs in one basket.

This is the real problem. These type of loan programs and other tax abatement strategies can really pay off (see how Austin transformed themselves in the 90's), but you don't take the entire amount available and dump it in one high risk venture. That's basically just gambling and should be left to the venture caps.