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More Mush from the RIEDC on Schilling

May 16, 2012

The state Economic Development Corporation has released a statement that raises  many more questions than it answers on the Curt Schilling 38 Studios deal. It states what the media already knows: that the EDC board met in closed session to discuss the company’s failure to meet a $1.1 million payment that was due earlier this month. “Members of the board asked many probing questions of the company,’’ states the release. “After representatives of 38 Studios concluded their presentation, the board engaged in extended discussion of confidential information.’’

The board did not take a vote. Then it states the obvious: “The company still has the option to cure the existing default by paying the guaranty fee that is past due.’’

“In the meantime we will continue to talk with 38 Studios and develop additional information, and will resume the board meeting at our regularly scheduled meeting on May 21.’’

Schilling hid from the media today and so far is not answering questions. Former Governor Don Carcieri, who brought the Schilling deal to R.I., is not returning journalists’ calls. Employees of 38 Studios in downtown Providence are not talking. What was the nature of the “probing” questions from the board?

There are now a zillion questions here. How much more money is Empty Sock Schilling looking for? If he needs more cash, what kind of collateral is he willing to put up to ensure that RI taxpayers don’t get fleeced any more than we are already on the hook for? Why can’t a millionaire professional athlete simply write a check for the $1,125,000 he owes the state EDC? Or is our World Series hero now  just another Wall Street-style crook gambling with Other People’s Money.

Have bankruptcy or workout lawyers been called in by 38 Studios or the state?. What is the state doing legally to protect to protect the interests of taxpayers?

Who at EDC was responsible for monitoring this project? Didn’t they hire a third party consultant with experience in start ups or venture capital to keep tabs on this? Keith Stokes and his team at EDC have some serious splainin’ to do, as Ricky Ricardo used to tell Lucy.

Gov. Lincoln Chafee is in a corner  on this one. He opposed this deal when he ran for governor. But now that he is governor he has a fiduciary responsibility to try to make the deal work. In an interview Tuesday with RI Public Radio, Chafee said he is loath to commit any more taxpayer money to this deal, but that he would be willing to try to help 38 Studios obtain financing in the private capital markets.

It wasn’t just Carcieri who led our state down this path to perdition with this worst and most hypocritical  form of crony capitalism. The General Assembly was a willing enabler. Speaker Gordon Fox and Senate President Teresa Paiva Weed also owe taxpayers some explanation of what they did to monitor this deal. And maybe General Treasurer Gina Raimondo, who hails from the venture capital world, has some ideas that could help out here. So far she has been silent. Question for Raimondo: If  Schilling violates the terms of his agreement with the state by missing a payment deadline, are the taxpayers still liable for the deal?

UPDATE: At 4:36 p.m. Joy Fox, Raimondo spokeswoman, said the “the general treasurer has requested briefings from EDC and the governor’s office. While she has no additional information beyond the media reports, the treasurer has concerns regarding how much money the taxpayer could lose should the company not meet its financial obligations. In particular, she is interested to learn how this deal has been monitored over the past year.”

Thus far this issue has been handled with an alarming lack of transparency and a blatant disregard for open government and the taxpayers. This EDC statement resembles nothing so much as Orwellian Newsspeak. Before the next EDC meeting, all members ought to be required to read Orwell’s essay `Politics and the English Language.’

Let’s not forget that Massachusetts state government passed on this deal, which would have kept 38 Studios and Red Sox legend Schilling in the Bay State. The reason: the deal was too risky.

Once again Rhode Island looks like New England’s Rube state, with a former governor blinded by a faux friendship with a celebrity jock and his legislative enablers willing to put RI taxpayers at risk for what is beginning to look like a bad crony capitalism investment in an elusive  video game jackpot.

For the taxpayers sake, let’s hope this is not as bad as it appears. But you have to wonder – word is already spreading in the Boston media of 38 Studios missing a deadline to introduce a new product at an upcoming video game trade show.

If this thing goes belly up it will be the absolute dumbest thing the Smith Hill gang has done since then-Gov. Ed DiPrete and the General Assembly refused in the late 1980s to require  state-insured credit unions to obtain federal deposit insurance. Remember how that one turned out?

2 Comments leave one →
  1. Mister Guy permalink
    May 16, 2012 9:06 pm

    “Why can’t a millionaire professional athlete simply write a check for the $1,125,000 he owes the state EDC?”

    LOL…Mr. Schilling is apparently worth somewhere in the neighborhood of $60 Million. Who knows how much cash he has on hand though.

    “What is the state doing legally to protect to protect the interests of taxpayers?”

    What can they do?

    “Let’s not forget that Massachusetts state government passed on this deal, which would have kept 38 Studios and Red Sox legend Schilling in the Bay State. The reason: the deal was too risky.”

    Let’s be fair here. I remember hearing that many in MA were upset that Schilling was taking his business out of the Bay State. I always got the feeling that liberals in MA state govt. weren’t too keen to help out a “conservative” like Curt Schilling.

    It sounds like too many pols in RI were duped by the lure of a “new” kind of business coming to RI. Betting most of the farm on what appears to be only one or two video games (including an MMO) is a very risky endeavor indeed. Those games are a dime a dozen.

  2. May 17, 2012 11:42 am

    Thank you for calling it like it is. Carcieri was the worst Governor we’ve ever had, and bears much of the blame for this fiasco. But the Democratic leaders in the assembly are also very much at fault. This is a shameful example of trickle down welfare economics – our leaders trip over themselves to hand out public money to the rich and powerful, in the hopes that it creates something for the rest of us. the Fed did it repeatedly in the bubble before the 2008 crash, and then did it again afterwards. RI does it with unaccountable tax breaks for corporations – which has led to massive state deficits and high unemployment. Clearly, this trickle down welfare scheme doesn’t work.

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