State, taking on risk with 38 Studios deal, sets up hard goals to protect interests
FULL COUNT: Former Red Sox pitcher and 38 Studios founder Curt Schilling unveils a video game during a California showcase last month.
BLOOMBERG NEWS PHOTO
By Denise Perreault PBN Staff Writer
Rhode Island has made itself a player in an unusual, high-risk venture to create well-paying jobs and establish a video game development cluster in Providence, now that the R.I. Economic Development Corporation board of directors has approved a $75 million loan guarantee for Curt Schilling’s company, 38 Studios LLC.
Schilling, best known as a former pitcher for the Boston Red Sox and other teams, said after the EDC board’s 8-1 vote July 26 that he will work hard to protect the state’s interest. “I’ve invested a significant amount of my life’s earnings in 38 Studios,” he said, pledging “to protect the state’s interest as much as my own.”
But Schilling would not be able to save the state from a fiscal disaster if 38 Studios goes bankrupt and the state is left to pay back the loan.
“No venture capitalist would give that much money to a startup,” said Michael Gurau, a venture capitalist with Clear Innovation Partners in Portland, Maine. “I can’t think of a similar instance” where a state has taken such a risk, said Gurau, a frequent contributor to Providence Business News.
If the company goes under, he suggested, no money likely will be left to return to the state or pay any penalties the state may assess.
Schilling declined to say how much he has invested in the company he founded in 2006, now located in Maynard, Mass., and Baltimore. He revealed that he negotiated exclusively with the Ocean State, rather than pitting one state against another, and he maintained that he sees the final agreement as the start of a “partnership” with the state, “not just a business deal,” he said.
Pointing out that he knows what it is like to be part of a world championship team – referring to the four World Series in which he has pitched (1993, 2001, 2004 and 2007) – the Alaska native said he intends to put together “the best team in the world” to produce his video games. Already on board are best-selling fantasy author R.A. Salvatore and comic book artist Todd McFarlane.
The state in June unveiled a job-creation guaranty program, promising $125 million in loan guarantees to small businesses working in the knowledge and technology fields. The company will get 60 percent of that sum and is eligible to receive the state’s motion picture tax credit.