The Crash of 38 Studios

Dear Reader,

Baseball and baseball players equate to hope ….  an American institution …  personal difficulty doesn’t stop them from playing, personal injury doesn’t stop them from playing and war doesn’t stop them from playing …  and we have hope.  They are good for us.   We are going through a recession about as bad as the great depression and we can get away from it all by going to the game and having a hot dog….

But what do I do now?

Rhode Island has the worst economy in the 52 United States.  Enter our hero, Curt Schilling with his company 38 studios to revive Rhode Island!  Right in downtown Providence — I walk by there.  It’s right near the library.   It’s right near my favorite restaurant,  The AS220.   Right in my backyard.   We loaned him money we didn’t have to spare… $75 million dollars because our hero Curt Schilling would have created 450 new jobs over the next three years as well as bringing untold revenue into the state.

My nephew’s education would have been in much better shape.   My bus trips to and from the job I just got would have been more secure.   People could have received much-needed state-assisted training to meet the needs of employers. The revenue from 38 Studios coming into Rhode Island would have benefitted us all.

But this is where reality diverges from the fantasy of the heroes of movies.   The business failed.

What does the news from 38 Studios itself say?  A Twitter post on May 23, 2012 reads: “RT @ghrig38: Reckoning, 38 Studios first game, has outperformed EA’s projections by selling 1.2mm copies in its first 90 days”  There is a competed game and it will sell. When he was building 38 Studios, in his own blog, Curt Schilling commented on our economic crisis, “I also think there can be no question that it falls on us, the individuals, to find a way out of our own personal crisis, as we can.”  Was that advice only good when directed at others?

If someone takes out a loan to buy a house then loses their job — the house is foreclosed on and the bank gets it back to resell.   In this case, how do we recover our money?   Are we just left with more debt to bury ourselves and Mr. Schilling just moves on to his next project and says, “Oh well.”?  Do we get tied up in litigation paying lawyers more money and never getting ours back?  What does this mean when the individual in question is responsible for so much?  Starting a video game company for fun is a great idea!   But people’s lives and livelihoods were becoming involved in this.   It grew to something more than leisure.

So what now?   Does our hero come through for us?   Or do I tell my nephew that Curt Schilling, like so many others, was ony self-serving?   Do I tell my nephew that his hero was only in it for the glory or it mattered in the long run?

The test of character is what happens when you can get away with anything.  Curt Schilling has the money and fame.   He does not have to be a good guy.  The bulk of the press is on his side, the laywers are on his side, and his former employees are on his side.  I know it is painful to have a vision… a dream … fail.   It must be painful for Mr. Schilling.   This was a dream of his.  This can’t be the first failure he has ever faced.   He became a world-class ball player and that doesn’t come without hard work and some setbacks.  All I ask is please pay Rhode Island back.  Do what any hard working person with integrity would do.   If you don’t have the money up front, set up a payment arrangement over time and pay us back.   Or make whatever business arrangment makes the most sense to get us our money back and benefit us in the long run the way you would have.   Please don’t default on our hopes.

I do not share Forbes’ “silver lining” theory about defaulting on a loan to the state of Rhode Island.  Although Forbes gave a great analysis to why the business failed, I don’t know any bank that would willingly write a loan on what might happen.   “My business failed and I didn’t pay back the loan, but all my employees will find other jobs so its good for the state even if those jobs are in other states.   Can I have more money to work with?”  It doesn’t take an Ivy League education to know that not paying a loan back is a bad thing.

His blog spoke to personal responsibility.   Well, after finishing school, I went through three years of unemployment and plenty of mounting debt.   When I got my job, I began paying off my old debts and not financing new dreams until I could afford it.   Businesses were put out becaue of my financial hardship and they deserved to be paid back.   The reasons for my financial hardship were immaterial — the fact that I wasn’t working had an impact on those around me.  Even though I still qualified for money from the state I did not take it.   I paid out of my salary because I would not futher contribute to the problems in Rhode Island.   I suffered setbacks and failure.   I overcame and found a full time job in an economy where there are almost none.  I did the right thing and I’m not a world-class ball player.   I’m just an individual doing my part.   This is the standard I set for my nephew.

We believed in you enough to finance your dreams.   Please don’t crush ours.