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Schilling deal not cut-and-dried as opponents assert

August 31, 2010

So the Rhode Island Economic Development corporation is giving a $75 million development deal to a video game company headed by former Red Sox pitcher Curt Schilling. Wrni’s Scott Mackay takes a look at a company that didn’t get any financing from the EDC.

Carbon ocean yachts is a fledgling Bristol yacht building company that opened its doors last year in Rhode Island because our state is home to some of the world’s top boat builders. The company builds custom yachts and its first product _ a $10 million, 82-foot yacht, is scheduled to set sail in October.
The firm has just over 20 workers They earn an average wage of more than $20 an hour and the company pays 100 percent of employee health benefits. Carbon ocean is a good fit with other east bay boating industries. It buys masts from Hall Spars, a mast-builder located just a few yards down the street in Bristol.
Boat-building and related marine pursuits are in R
hode Island’s DNA. Our state has been a home to these industries since colonial times. Many, many studies, including the famous greenhouse compact of the 1980s, have urged state government to nurture such industries.
Britt Colombo, one of the yacht-builders’ top executives, says he came to Rhode Island because of the trained labor force, which he considers to be among the world’s best. As is the case with many new entrepreneurs, he is optimistic about the future, but speaks openly about the challenges of manufacturing in New England, especially the high electricity rates and heating costs.
When Colombo heard about the state’s economic development corporation’s new loan program to help small businesses, he applied for help. He spoke to EDC officials about a $250,000, state-backed loan to help with marketing, but was rejected.
While carbon ocean yachts and other small businesses were turned down for state loans, former Boston Red Sox pitcher Curt Schilling was given a $75 million deal for a video game start-up that has no products and no revenues. The schilling deal has drawn criticism from some candidates for governor, most notably independent Lincoln Chafee and the moderate party’s Ken Block. The chairman of the state Republican Party and the GOP leader in the legislature have also voiced opposition to the deal. Even Democrat Frank Caprio, an early supporter, now has questions.
The Schilling agreement was stoutly defended by its major champion, Governor Carcieri. In a recent letter to Chafee, the governor said the EDC consulted with industry and financial experts before extending the deal.
Keith Stokes, state economic development director, is trying his best to bring jobs to a state with New England’s highest unemployment rate. Stokes says the issues in this case are not as clear-cut as the politicians or the Carbon Ocean Yachts executives assert. Colombo, the yacht builder, spoke with an EDC official, Paul Harden, who deals with work force training issues and is not empowered to make grants or loans for marketing. Stokes says that EDC is doing its best to nurture home-grown Rhode Island small businesses with an array of programs and that the Schilling program has nothing to do with the availability of money for such small-business incubation. Schilling’s company, is poised to be an anchor to draw other technology companies to the state.
There is a philosophical argument here also. Should government be in the business of picking and choosing companies to get taxpayer support in the private sector.
The retired Sox pitcher has promised 450 jobs at an average salary of $72,500. The Schilling deal burned through 60 percent of the $125 million the state put aside to help small Rhode Island businesses. These jobs will be poached from Maynard, Massachusetts, where the company is now headquartered.
What if, as the financial weekly Barron’s put it, the state provided loan guarantees of $750,000m to 100 anonymous entrepreneurs instead of a single world series hero.’’
Now that the state has redistributed millions in taxpayer benefits to Schilling, we all have to root for the company’s success. But one wonders, if his name was Curt Schmidlap, would the state have gone for this deal? And would our hard-earned money be better invested helping companies that already employ Rhode Islanders and have real revenues.

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