Curt Schilling Discusses the Demise of 38 Studios

[CybrSlydr]

Curt Schilling Discusses the Demise of 38 Studios
His baseball fortune is “probably all gone.”

http://www.ign.com/articles/2012/06/...-of-38-studios

by Colin Moriarty
June 22, 2012

Today, former MLB pitcher and 38 Studios founder Curt Schilling gave his first interview since the demise of his Rhode Island-based developer. The interview was given on The Dennis & Callahan Morning Show on WEEI in Boston, a program on a sports radio station that covered Schilling extensively during his days on the Boston Red Sox.

The lengthy interview was distilled by the Boston Globe-owned Boston.com, though you can listen to the extensive interview for yourself. Here’s Part 1, Part 2, Part 3, Part 4, and Part 5.

The crux of the issue, according to Schilling, was that 38 Studios was never able to raise additional venture capital. “We tried for a long time to do that and it didn’t come to fruition,” he said. The money was largely needed to continue the development of Project Copernicus, the MMORPG set to take place in the universe of Amalur. This is the same universe where Kingdoms of Amalur: Reckoning took place, a game released earlier this year to critical acclaim.

38 Studios, at the time of its Chapter 7 bankruptcy declaration, had outstanding debts of over $150 million, with controlled assets valued at nearly seven times less than what’s owed. The state of Rhode Island is on the hook for a majority of the money, according to Boston.com. The Boston Globe report notes that “The company reported it owed money to more than 1,000 people and companies, most of whom likely won’t recover any money.”

Notably, Schilling talked about how 38 Studios began to fall apart at a rapid pace once a $35 million deal with a still-unknown publisher fell through to allow the development of a sequel to Reckoning. When a private investor, according to Schilling, tried to give 38 Studios up to $20 million of the needed money under an agreement with Rhode Island that would restructure the outstanding loan, the deal fell through. “If that happened,” this investor “would come in and save the company,” Schilling claimed.

Schilling also talked a bit about his own financial stake in the company. The Boston Globe notes that “he personally invested more than $50 million in the company, in addition to the $5 million to $10 million from other wealthy investors and a $75 million loan guarantee it received from the state of Rhode Island to entice it to move to Providence last year.”

“I put everything in my name in this company. I believed in it. I believed in what we built. I never took a penny in salary. I never took a penny for anything,” Schilling told Dennis & Callahan. He apparently told his family that “the money I saved and earned playing baseball was probably all gone... life is going to be different.”

[WordMasterRice]

This guy is just a straight up idiot. He sinks everything he has into a game company.

This is not to say anything about how poorly that company must have been run. To blow through that kind of scratch making a game, morons.

[Sephiroth]

Originally Posted by WordMasterRice

This guy is just a straight up idiot. He sinks everything he has into a game company.

This is not to say anything about how poorly that company must have been run. To blow through that kind of scratch making a game, morons.

I tried to say something different but to the same effect. I can't.

What an idiot. $50 million into an upstart game manufacture in both a declining market and one that's super-saturated?

Jesus. I have to imagine 'it seems like a good idea, just a little bit more here and there' but at some point, maybe when I reached 5-10mil I would have needed to say, 'that's enough' and protect my own interests.

Not only that, but he's ruined his family's financial security as well.

[CybrSlydr]

I do admire his commitment to getting it done and show he was serious by putting that much of his own scratch into it.

But misguided at best. Probably why the private investor bailed.

[Playap0wnr]

If he wanted to get into gaming so badly, he should've bought an extremely high end computer or maybe tried to fund a preexisting company. Instead, he jumped head first into something that he had little to no experience with, and lost big time.

[AruisDante]

One thing I wish more people would talk about is the fact that the $75 million from RI was mostly to cover relocation from MA to RI and job creation in RI. They also made a few acquisitions (Big Huge Games for example) in order to try and bring in revenue.

As for burning through that amount of cash, they were developing a MMO. A WoW scale MMO. That's pretty much the most expensive thing you can develop. Even if they hadn't had to spend the majority of the loan they had received from RI on relocation costs, $150 million isn't nearly enough money to develop a MMO, not to mention run and support it.

Schilling's problem was that he conflated loving games with being able to run a company that produces games. This whole thing has been an absolute disaster. But, in the big scheme of things, knowing that he lost the majority of his own fortune makes me think much better of the whole situation. 300 and change people lost their jobs, and the CEO effectively lost everything he had. Compare that to, say HP, which has over the past two years given two CEO's golden handshakes in the neighborhood of $80 million combined money (The first one was fired for fudging the books and still got a cool $40 million in severance) while at the same time laying off THOUSANDS of employees.